Shareholder group seeks changes in casino operator Full House Resorts

LAS VEGAS -- A group of shareholders in casino operator Full House Resorts, Inc. are seeking a special stockholders meeting in order to remake the Las Vegas-based company’s board of the directors.

In a filing Thursday with the U.S. Securities and Exchange Commission, the group — led by former Pinnacle Entertainment, Inc. CEO Dan Lee — said the company “has failed stockholders” and needs to replace its board and management team.

Full House owns three casinos in Indiana, Mississippi and the Stockman’s Casino in Fallon. The company also manages the Grand Lodge Casino at Hyatt Regency Lake Tahoe under a lease agreement. Last month, the company’s management contract for an Indian casino in New Mexico ended.

In a statement the stockholder group, which owns 6.2 percent of the company’s outstanding shares, said it wants to elect five new members to the company’s board.

“The company has gone on a reckless buying binge, overpaying for three shrinking casinos and pursuing two hotel additions that have marginal returns,” said Lee, a gaming industry veteran who also served as CFO of Steve Wynn’s Mirage Resorts, Inc.

Lee and his group criticized a failed attempt by Full House to purchase a Tunica, Mississippi casino this year in which the company lost more than 97 percent of $1.75 million escrow account and spent $300,000 in professional fees associated with the transaction.

The five shareholders also include former Boyd Gaming Corporation CFO Ellis Landau, who is president of the holding company that owns the Aliante Casino Hotel and Spa in North Las Vegas.

In a letter to Full House shareholders, the group said the company’s shares, which are traded on the Nasdaq, fell almost 59 percent between September 2013 and September 2014. They also criticized the leadership of Full House Chairman and CEO Andre Hilliou and the compensation paid to management.

According to Full House’s second quarter earnings statement, the company lost $8.5 million in the three-month period that ended June 30.

Lee said Full House has “borrowed recklessly and has not invested the money well.” He said the company needs more experience and independence in the board.

“It is hard to imagine a more irresponsible stewardship of shareholder money than we have seen at Full House Resorts,” Lee said. “Shareholders could lose more or all of their investment if the company continues on its recent course.”