US casino operator Full House Resorts has said it has no interest in a proposed acquisition by Z Capital Partners and its subsidiary Affinity Gaming.

FHR

The company has issued the following letter in response to the letter received yesterday from Z Capital. “The board of directors of Full House Resorts has reviewed your letter indicating the interest of Z Capital Partners and its portfolio company Affinity Gaming in acquiring Full House Resorts at a price of $1.79 per share in stock or cash.

“Our board has unanimously determined that the potential transaction referenced in your letter is not in the best interests of Full House Resorts and its stockholders.

“Your letter indicates a price without specifying a transaction structure or providing evidence of financing. The price dramatically undervalues the company’s business and does not remotely reflect the company’s strategic value and future prospects.

“Our board and management team see significant upside to the company’s current and recent trading prices based on already-completed capital projects across our existing portfolio (with the recently launched and highly successful Rising Sun/Rabbit Hash ferry just one of many examples), as well as established or prospective organic growth opportunities in Colorado, Indiana and New Mexico, among other places.

“The price indicated in your letter represents a material discount of 35 per cent to the company’s closing price on October 19, 2018, the last trading day prior to when you publicly announced your proposal, and a discount of 40 per cent to the company’s volume weighted average price during the preceding three months. This reflects a stark and fundamental disconnect from our board’s understanding of the company’s value, as well as that of third party investors and analysts.

“We would also note that any combination of Affinity Gaming and our company presents significant execution risks in light of the jurisdictional overlaps between Affinity Gaming and Full House Resorts.

“When we met with Andrei Scrivens at Z Capital’s offices in Lake Forest, Illinois, on September 21 - our only meeting - our purpose was to express potential interest in acquiring certain of Affinity Gaming’s assets. We remain interested in doing that.

“Our board and management team collectively own approximately 17 per cent of Full House Resorts’ shares and our highest priority is creating value for the company’s stockholders. Based on our review, we are fully confident that our strategic plan will deliver value for our stockholders far superior to the value your letter indicates. Accordingly, our board has no interest in pursuing what you propose.”