News

Z Capital and its portfolio company Affinity Gaming, a Las Vegas-based casino gaming operator, has proposed to acquire Full House Resorts, an owner, developer and operator of gaming facilities. The deal would put the valuation of Full House at $132.5 million. Sidley Austin LLP is serving as legal counsel to Z Capital and Affinity Gaming on its takeover bid.

PRESS RELEASE

NEW YORK and LAS VEGAS – October 22, 2018 – Z Capital Partners (“Z Capital”), a leading alternative asset manager of private equity and credit funds, and its affiliate, Affinity Gaming (“Affinity”), today announced a proposal to acquire Full House Resorts (“Full House” or the “Company”) (Nasdaq: FLL), a leading owner, developer and operator of gaming facilities throughout the country.

The proposed transaction would be structured as a cash or stock transaction with an enterprise value of the Company of $132.5 million, which equates to $1.79 per share on a fully diluted basis.

“Our proposal represents a unique and compelling opportunity to maximize value for stockholders and stakeholders in both companies,” said James Zenni, Chairman of Affinity’s Board of Directors and Chief Executive Officer of Z Capital Partners. “Combining Full House’s custom-designed, regional gaming properties with Affinity’s complementary portfolio will create a best-in-class platform for value creation in this consolidating market. With an experienced and dedicated management team, Affinity would bring significant operational capabilities and expertise that we believe would further propel the combined company’s growth and unlock unrealized potential for Full House stockholders.”

Zenni continued, “We look forward to a constructive dialogue with the Full House Resorts Board of Directors as they carry out their fiduciary duties on behalf of the Company’s stockholders.”

As an established financial sponsor, Z Capital is confident it can obtain any necessary debt financing commitments needed to complete the proposed transaction and would agree to a post-signing “go shop” period to satisfy the Board’s fiduciary duties.

Upon closing, the combined company would remain headquartered in Las Vegas, with a management team led by recently appointed Affinity CEO, Tony Rodio, a proven executive with more than three decades of experience in the gaming industry and a strong track record of transformative growth.

The full text of the letter sent to the Board of Directors of Full House on October 22, 2018 is below:

Board of Directors
Full House Resorts, Inc.
One Summerlin
1980 Festival Plaza Drive, Suite 680
Las Vegas, Nevada 89135

Dear Full House Resorts, Inc. Board of Directors:
Following our meeting with your management team earlier this month, Z Capital Partners, L.L.C. (“Z Capital”) and its portfolio company Affinity Gaming (together with Z Capital, “we”) are pleased to submit this non-binding proposal to acquire Full House Resorts, Inc. (“Full House Resorts” or the “Company”).

The combination of Affinity Gaming and Full House Resorts would create an industry leader with a best-in-class portfolio of hotels and casinos in the United States. This proposal creates a unique opportunity not otherwise available to the Company’s stockholders given the market capitalization and limited liquidity of the Company’s stock.
1. Transaction Structure. The transaction would be structured as a cash or stock transaction.

2. Consideration. We would propose an enterprise valuation of the Company of $132.5 million, which equates to $1.79 per share on a fully diluted basis, in connection with the transaction.

3. Financing. We would expect to finance the proposed transaction with debt financing from third party financial institutions with whom Z Capital has longstanding relationships. We are highly confident that we can obtain any necessary debt financial commitments needed to complete the proposed transaction.

4. Due Diligence and Exclusivity. Z Capital would require a reasonable period to complete customary due diligence. Z Capital intends to work with a team of third-party advisors that it has worked with on other similar transactions to complete its due diligence and assist with review of the transaction, including Sidley Austin LLP as legal counsel. Prior to commencement of due diligence, Z Capital would require the Company to enter into a customary exclusivity agreement during which the Company would agree to negotiate the definitive documentation exclusively with Z Capital and not solicit any alternative transaction. Z Capital would be prepared to agree to a post-signing “go shop” period to satisfy the fiduciary duty of the Board of Directors of the Company (the “Board”).

5. Conditions. The proposed transaction would be subject to: (a) satisfactory completion of due diligence; (b) receipt of debt financing commitments with respect to the debt financing necessary to complete this transaction; and (c) negotiation of one or more satisfactory definitive agreements with representations, warranties, covenants and closing conditions that are reasonable and customary for transactions of this type. We are prepared to commence work immediately to satisfy these conditions. We are highly confident that the conditions can be satisfied expeditiously.

6. Non-Binding Letter of Intent. This Letter of Intent is non-binding and is intended only as a proposal summarizing key terms of a proposed acquisition of or merger with the Company. This Letter of Intent does not create any agreement, obligation, right, duties or commitment by any party to enter into any agreement. No obligation will arise or be created unless and until one or more definitive agreements are executed and delivered by the applicable parties.

7. Timing. We hope to work with you on a negotiated basis to complete this transaction successfully, and are prepared to deliver a draft merger agreement, subject to our due diligence process. We suggest that we enter into a non-disclosure agreement with you so that we can begin due diligence and discussions with your financial and legal advisors at your earliest convenience. Due to the importance of these discussions and the value represented by our proposal, we expect the Board to engage in a full review of our proposal.

We would be happy to make our team available to meet with the Board at your earliest convenience. To the extent we fail to hear a favorable response from the Board to our proposal by October 29, 2018, we reserve the right to take our proposal directly to the Company’s shareholders.

Best regards,
Z Capital Partners, L.L.C.
Name: James J. Zenni, Jr.
Title: President & CEO
Affinity Gaming
Name: James J. Zenni, Jr.
Title: Chairman, Board of Directors

Sidley Austin LLP is serving as legal counsel to Z Capital and Affinity.

About Z Capital Group
Z Capital Group, L.L.C. and its subsidiaries (“Z Capital”) are a leading alternative asset management firm with approximately $2.3 billion of regulatory assets under management. For over two decades, the Partners of Z Capital have worked exclusively to realize significant capital appreciation by making controlling equity investments in manufacturing and industrial companies across a diverse array of industries, including basic materials, branded consumer, automotive parts, capital equipment and general manufacturing.
Z Capital creates value for its investors by collaborating with talented management teams to generate investment returns by structurally improving the strategic position, competitiveness and profitability of its portfolio companies. The Z Capital Private Equity Funds’ portfolio companies are within numerous industries, have aggregate annual revenues of approximately $1.3 billion, sell products in 57 countries, and have over 11,000 employees and an excess of 200,000 associates, directly and through joint ventures worldwide. The Z Capital investment strategy and portfolio companies are described at www.zcapgroup.net.

About Affinity Gaming
Affinity Gaming is a diversified casino gaming company headquartered in Las Vegas, Nevada. The company’s casino operations consist of 11 casinos, five of which are located in Nevada, three in Colorado, two in Missouri and one in Iowa. For more information about Affinity Gaming, please visit its website: affinitygaming.com.