UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 31, 2017
Affinity Gaming
(Exact name of registrant as specified in its charter)
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Nevada |
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000-54085 |
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02-0815199 |
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(State or other jurisdiction of |
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(Commission File Number) |
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(IRS Employer Identification No.) |
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3755 Breakthrough Way |
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89135 |
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(702) 341-2400 |
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(Address of principal executive offices) |
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(Zip Code) |
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(Registrant’s telephone number, including area |
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Introductory Note
On January 31, 2017 (the “Closing Date”), pursuant to the terms of the Agreement and Plan of Merger dated as of August 22, 2016 (the “Merger Agreement”), among Affinity Gaming, a Nevada corporation (the “Company”), Z Capital Affinity Owner, LLC, a Delaware limited liability company (“Parent”) and Affinity Merger Sub, Inc., a Nevada corporation (“Merger Sub”), Merger Sub was merged with and into the Company (the “Merger”), with the Company surviving the merger as a wholly owned subsidiary of Parent. Parent and Merger Sub are affiliates of Z Capital Partners, L.L.C., a Delaware limited liability company (“Z Capital”). A copy of the Merger Agreement is attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on August 23, 2016.
The events described in this Current Report on Form 8-K took place in connection with the completion of the Merger.
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Item 2.01 |
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Completion of Acquisition or Disposition of Assets. |
The information set forth in the Introductory Note and Items 3.03, 5.01 and 5.02 of this Current Report on Form 8-K is incorporated herein by reference.
At the effective time of the Merger (the “Effective Time”), each share of common stock, par value $0.001 per share, of the Company (“Common Stock”) issued and outstanding as of immediately prior to the Effective Time (other than shares held in treasury of the Company or owned, directly or indirectly, by Parent, Merger Sub or the Management Rollover Investors (as defined below) ) was converted into the right to receive $17.35 in cash (the “Merger Consideration”), without interest and subject to deduction for any required withholding tax.
In addition, at the Effective Time, (1) each option to purchase common stock of the Company, whether vested or unvested, that was outstanding immediately prior to the Effective Time (other than shares owned by the Management Rollover Investors) became fully vested (to the extent unvested) and was converted into the right to receive an amount in cash equal to the product of (i) the excess, if any, of $17.35 over the exercise price per share under such stock option by (ii) the number of shares of the Company’s common stock subject to the option, and (2) each outstanding share of restricted stock subject to time-based vesting restrictions that was unvested and outstanding immediately prior to the Effective Time (other than shares owned by the Management Rollover Investors) became fully vested and was converted into the right to receive an amount in cash (without interest, and subject to withholding tax) equal to the product of (i) $17.35 and (ii) the number of shares of the Company’s common stock subject to the restricted stock award.
Further, at the Effective Time, the previously owned shares, options to purchase common stock of the Company, whether vested or unvested, outstanding shares of restricted stock that were unvested and outstanding immediately prior to the Effective Time, and commitments of the Company and any of its affiliates to issue equity or equity-based awards to Michael Silberling, Walter Bogumil and Jeffrey Solomon (the “Management Rollover Investors”) were treated as follows: (1) Mr. Silberling’s previously owned shares, outstanding options, outstanding shares of restricted stock, and commitments of the Company and any of its affiliates to issue equity or equity-based awards were cancelled and, in exchange therefor, Z Capital Affinity Holdings, L.L.C., the sole member and managing member of Parent (“Holdings”), provided Mr. Silberling $1,901,638 in cash, vested options to purchase 158,901 Class A units of Holdings and 455,495 profits interest awards in the form of restricted Class B units of Holdings; (2) Mr. Bogumil’s previously owned shares, outstanding options, outstanding shares of restricted stock, and commitments of the Company and any of its affiliates to issue equity or equity-based awards, were cancelled and, in exchange therefor, Holdings provided Mr. Bogumil $52,050 in cash, 17,000 Class A units of Holdings, vested options to purchase 80,000 Class A units of Holdings and 224,628 profits interest awards in the form of restricted Class B units of Holdings; and (3) Mr. Solomon’s outstanding options, outstanding shares of restricted stock, and commitments of the Company and any of its affiliates to issue equity or equity-based awards, were cancelled and, in exchange therefor, Holdings provided to Mr. Solomon options to purchase 80,000 Class A units of Holdings (40,000 of which are subject to time-based vesting, fifty percent (50%) of which will vest on December 31, 2017 and fifty percent (50%) of which will vest on December 31, 2018, and 40,000 of which were fully vested at the Effective Time) and 199,669 profits interest awards in the form restricted Class B units of Holdings.
The foregoing summary is not complete and is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is attached as Exhibit 2.1 to the Company’ Current Report on Form 8-K filed on August 23, 2016 and is incorporated herein by reference.
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Item 3.03 |
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Material Modification to Rights of Security Holders. |
The information set forth in the Introductory Note and Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.
At the Effective Time, all issued and outstanding shares of Common Stock (other than shares held in treasury of the Company or owned, directly or indirectly, by Parent, Merger Sub or the Management Rollover Investors (as defined below) or shares for which dissenters’ rights were properly demanded and perfected pursuant to Nevada Revised Statute 92A.300 through 92A.500) were automatically cancelled and converted into the right to receive the Merger Consideration. Accordingly, at the Effective Time, the Company’s stockholders immediately prior to the Effective Time ceased to have any rights in the Company as stockholders, other than the right to receive the Merger Consideration, or with respect to stockholders holding shares for which dissenters’ rights were properly demanded and perfected pursuant to Nevada Revised Statute 92A.300 through 92A.500, dissenters’ rights.
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Item 5.01 |
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Changes in Control of Registrant. |
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The information set forth in the Introductory Note and Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.
As a result of the Merger, a change in control of the Company occurred, and the Company became a wholly owned subsidiary of Parent.
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Item 5.02 |
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
The information set forth in the Introductory Note and Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.
Each of the following persons, who were directors of the Company prior to the completion of the Merger, resigned as directors of the Company effective as of the Closing of the Merger: Michael Silberling (solely in his role as director), Andrei Scrivens, Eric V. Tanjeloff, Matthew A. Doheny, James Cacioppo and David Reganato. No director resigned because of any disagreement with the Company on any matter relating to its operations, policies or practices.
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Item 8.01 |
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Other Events. |
On February 1, 2017, the Company issued a press release announcing the closing of the Merger. A copy of the press release, which is incorporated herein by reference, is attached as Exhibit 99.1 to this Current Report on Form 8-K..
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Item 9.01 |
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Financial Statements and Exhibits. |
(d) Exhibits
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Exhibit Number |
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Description |
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2.1 |
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Agreement and Plan of Merger, dated August 22, 2016, by and among Affinity Gaming, Z Capital Affinity Owner, LLC, and Affinity Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 23, 2016)* |
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99.1 |
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Press release dated February 1, 2017 |
*Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, we have duly caused this report to be signed on our behalf by the undersigned hereunto duly authorized.
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Affinity Gaming |
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Date: |
February 1, 2017 |
By: |
/s/ Walter Bogumil |
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Name: |
Walter Bogumil |
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Title: |
Senior Vice President, Chief Financial Officer and Treasurer |
EXHIBIT INDEX
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Exhibit Number |
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Description |
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2.1 |
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Agreement and Plan of Merger, dated August 22, 2016, by and among Affinity Gaming, Z Capital Affinity Owner, LLC, and Affinity Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 23, 2016)* |
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99.1 |
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Press release dated February 1, 2017 |
*Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.
Exhibit 99.1
FOR IMMEDIATE RELEASE
Z Capital Partners Completes Acquisition of Affinity Gaming
NEW YORK, February 1, 2017 — Z Capital Partners, L.L.C. (“Z Capital”), the private equity management arm of Z Capital Group, L.L.C. (“Z Capital Group”), a leading global alternative investment manager focused on opportunistic, value-oriented private equity and credit funds, today announced the successful completion of its acquisition of Affinity Gaming (“Affinity” or “the Company”), a diversified casino gaming operator. Z Capital and its affiliates purchased the remaining outstanding shares of Affinity for $17.35 per share. The all-cash transaction values Affinity at approximately $580 million. Affinity’s stockholders approved the August 22, 2016 merger agreement between Affinity and certain affiliates of Z Capital at a special meeting on December 13, 2016.
James Zenni, Founder, President and Chief Executive Officer of Z Capital Group, has served on Affinity’s Board of Directors since August 26, 2014 and will become Chairman of the Board upon closing.
“We are pleased to have reached this significant milestone,” said Mr. Zenni. “We have had great respect for Affinity Gaming and its strong commitment to guests, employees, and partners for many years and have long believed that Affinity needs a long-term capital partner to position it for future growth. Since joining Affinity’s Board, we have brought in a best-in-class management team led by its CEO Michael Silberling and achieved a remarkable turnaround, which has resulted in market-leading EBITDA growth among regional casino operators for the last two years. We look forward to leveraging Z Capital’s broad expertise across the hospitality, restaurant, retail and consumer sectors to help Affinity continue to expand in attractive markets, while continuing to drive profitability through operating improvements and enhanced efficiencies.”
“Since joining Affinity in 2014, Z Capital has been an invaluable ally in executing our strategic initiatives,” said Michael Silberling, Chief Executive Officer of Affinity. “Z Capital shares our commitment to our valued customers, and I look forward to continuing to partner with the Z Capital team to grow and provide high-quality entertainment at affordable prices.”
Citizens Capital Markets, Inc. acted as financial advisor and Sidley Austin LLP served as legal counsel to Z Capital in connections with the transaction. Deutsche Bank Securities Inc. acted as the Special Committee’s financial advisor and Morrison & Foerster LLP served as its legal advisor.
About Z Capital Partners
Z Capital Partners, L.L.C. is the private equity management arm of Z Capital Group, L.L.C, a leading global alternative investment manager with approximately $2.3 billion of regulatory assets under management with offices in New York, NY; Lake Forest, IL; and Zurich, Switzerland. Z Capital Group manages opportunistic, value-oriented private equity and credit funds. Its investors include prominent global sovereign wealth funds, endowments, pension funds, insurance companies, foundations, family offices, and other institutions in North America, Europe, Asia, Africa and the Middle East. For more information, please visit 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: www.affinitygaming.com.
Forward-Looking Statements
Certain statements contained in this document are forward-looking statements. Forward-looking statements are inherently uncertain as they are based on expectations and assumptions concerning future events and are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected. Statements in this document are not intended to be, and should not be construed as, legal, business, investment, or tax advice. This document is not intended to be relied upon as the basis for any investment decision. Past performance is not a guarantee of future results. This material is not, and is not intended as, an offer or solicitation for the purchase or sale of any financial instrument.
Contacts
Z Capital
Jonathan Keehner / Julie Oakes / Tim Ragones
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
Affinity Gaming
Joseph Jaffoni, Richard Land, and Jim Leahy
JCIR (212) 835-8500
affinity@jcir.com