Full House Resorts Inc announced on Monday that it was “evaluating strategic alternatives for several months” and labeled a proxy fight from some of the company’s shareholders as “inappropriate and disruptive.”
Full House Resorts made an official announcement that it is actively searching for a “potential merger or sale of the company.” The announcement was published after a proxy solicitation was given to the Securities and Exchange Commission by a group of shareholders of the company.
Lead by Dan Lee, former CEO of Pinnacle Entertainment, the shareholders insisted on a meeting where the current board of directors will be reconsidered and hopefully changed. He stated that Full House had been reckless in its decisions to buy three casinos with decreasing growth, and had paid for them more than the average market prize.
Dan Lee is an expert in the gambling industry, having worked as a financial officer for Mirage Resorts as well as being the CEO of Pinnacle Entertainment. Another well-known name from the shareholders group is Ellis Landau, who is president of the company managing the Aliante Casino Hotel and Spa.
Full House Resorts kept on arguing that the goals of the shareholders group are dishonest by explaining that “many of the statements made by the dissident group are inaccurate or misleading.” It continued by announcing to its stockholders that it will provide its report on “strategic alternatives” as soon as it is completed.
Full House Resorts has three brick-and-mortar casinos located in Indiana, Mississippi and Fallon. It also operates with the Grand Lodge Casino under a lease contract. It has recently ended its management deal with a New Mexico casino.
The total value of Full House’s shares is $25 million.
The stockholders group is an owner of a little over 6% of Full House’s shares, and requires the change of five of the members of the company board. The group continued criticizing the decisions of Full House by reminding the SEC of an unsuccessful deal this year. Full House was unable to finalize the purchase a Mississippi casino, and lost close to $1.75 million in an escrow account. In addition, over $300,000 spent for honorariums for consultants.
Full House answered to the criticism of the shareholders. It posted a list of points which shows how the company dealt with its economic issues. For example, it explained that the Tunica casino purchase was withdrawn due to the economic decline in the gaming market of Mississippi. It further stated that it does its best to find the best solution, which suits stockholders.
In order for the proxy fight to commence, there needs to be at least 40% of the votes in favor.
