LAS VEGAS -- Affinity Gaming has agreed to sell three of its casinos in Northern Nevada for $19.2 million to a private investment group that includes the company's chief operating officer.
Affinity, which was formed following the December 2010 bankruptcy reorganization of Herbst Gaming, said Friday it would sell its casinos in Reno, Verdi and Dayton to Truckee Gaming. The transaction is subject to Nevada gaming regulators' approval.
Current Affinty Chief Operating Officer Ferenc Szony will leave the company to become a managing principal at Truckee Gaming, initially owning 100 percent of the equity interests, according to a statement. His stake will be reduced by other private investors.
Szony was one of the last remaining links between Affinity and Herbst Gaming. He joined Herbst in 2007 when the company acquired five Northern Nevada casinos for $140 million.
The transaction would leave Affinity with six casinos in Nevada, including the three Primm resorts and the off-Strip Terrible's. The company also operates casinos in Iowa and Missouri and is awaiting regulatory approval in Colorado to take over three casinos the company acquired in a deal with Golden Gaming.
"This transaction represents the substantial completion of our divestiture of noncore assets, which we identified nearly two years ago and which we carved out of our recently completed refinancing," Affinity Chief Executive Officer David Ross said in a statement. "With this sale, we are able to focus management's time on executing our long-term growth and expansion strategy and delivering the greatest value to our shareholders."
Illinois-based private equity group Z Capital Partners is Affinity's largest shareholder with almost 25 percent of the company.
Truckee Gaming agreed to allow Affinity to solicit competitive bids for the three casinos through Sept. 30. A third party would have to pay above the $19.2 million price and a $750,000 breakup fee to cover Truckee Gaming's expenses.
Affinity said it began planning for Szony's departure earlier in the sale process.
Global Leveraged Capital, a private investment and advisory firm operated by Affinity board member Thomas Benninger, is providing part of the financing for the transaction. Global Leveraged Capital can obtain up to 21 percent interest in Truckee Gaming.
The purchase price includes a $1.7 million credit for deferred maintenance capital and the agreement allows for further adjustments to the purchase price if the collective trailing 12 months of pretax earnings at the three casinos at the time of closing are greater than $4.1 million or less than $3.8 million.
Affinity expects the deal to close by June.
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