Las Vegas-based Affinity Gaming has rejected for the second time an offer from Z Capital Partners to purchase the remainder of the company, a source confirmed with Private Equity International.
Z Capital, an independent asset manager with a 39.5 percent stake in Affinity, made a proposal on 3 April to buy the outstanding shares, or 60.5 percent of the company, for $9.75 per share, according to a US Securities and Exchange Commission filing.
Following the proposal, Affinity's Special Opportunities Committee hired Deutsche Bank Group to advise the company, according to a source familiar with the matter. No liquidity issues were cited in the bid rejection, and the company has a balance sheet of $100 million.
Affinity shareholders SPH Manager and Spectrum Group Management each filed on 19 May a beneficial ownership report known as Schedule 13D with the SEC, claiming the proposed purchase price from Z Capital “is substantially below the price” they would be willing to consider for a sale.
Illinois-based Z Capital is now advocating for a sale of Affinity, according to the private equity firm's statement, which cited Affinity's equity devaluation of over 30 percent in the last two years.
“We are disappointed by the Special Committee's response with respect to our proposal,” the firm wrote. “The status quo has not delivered and will not deliver value to shareholders.”
On 13 May, 2013, Z Capital announced that a Nevada judge issued an order granting the firm to restrict Affinity from enforcing its shareholder rights agreement, giving the firm the OK to expand ownership in the company. Two months prior to the order, Z Capital had filed a complaint with the SEC against the company declaring Affinity's conversion from an LLC to a Nevada corporation was ineffective, among other things.
Z Capital, founded in 2006, has $1.9 billion in assets under management. Affinity Gaming is a casino gaming company with 11 locations across four states.