Full House Resorts CEO Dan Lee said he was “confident” the regional casino operator was “being responsible, careful and thoughtful” as it weathers the shutdown of its five properties, adding that a former company board member misstated several facts in his resignation letter last month.
Lee, the company’s CEO since December 2014, said Thursday that the Las Vegas-based company’s monthly $3 million cash burn rate was manageable and primarily consists of interest expenses, taxes, and other costs that can’t be reduced. Meanwhile, a small team is planning for the reopening of the company’s casinos in Mississippi, Colorado, Indiana, and Nevada and the return of most or all of its employees back to work.
“I’m confident that this is what our lenders, shareholders, directors, and employees want,” Lee said in a series of text messages.
Former Full House board member Craig Thomas resigned last month after he was not recommended for re-election by a majority of the board, according to the company’s proxy statement filed with the Securities and Exchange Commission.
In his letter, Thomas questioned Full House’s management, suggested Lee not be retained as CEO when his contract expires in November, and criticized the company’s handling the shutdown of its properties due to the COVID-19 coronavirus pandemic.
Thomas suggested the “interest rate of approximately 13%” that Lee and other company executives are accruing on one-third salary deferrals was too high.
Lee said Thomas’ published figure was wrong.
“The 13% number catches peoples’ eye, which is why he used it, but it was never 13% or even close to it,” Lee said. “An early draft had zero percent until 2022 and perhaps 10% thereafter. The final version had no interest accrual at all. So, his use of ‘13%’ is both inaccurate and misleading.”
In an SEC filing the week before Thomas’ resignation, Full House said it had $21.4 million in cash on its balance sheet. On Wednesday, Full House said in a further SEC filing that it had struck an agreement with lenders over certain fees covering debt not due until 2024.
Full House furloughed 1,600 workers from its properties until the casinos are reopened. The company previously said it was keeping 30 management employees on the payroll, along with a small number of workers at each casino and five in the corporate offices. Full House also retained 20 security and surveillance people that “are mostly hourly and often mandated by the state gaming commission in that state, to oversee the security of the slot machines, etc.”
Lee also disputed Thomas’ suggestions that the company close the “Christmas Casino” in Cripple Creek, Colorado, which is adjacent to the company’s Bronco Billy’s Casino, and shut down ferry service at Rising Star Casino in Indiana that transports guests from across the river in Ohio.
Lee said the Christmas Casino – a small, closed casino the company acquired as part of its expansion plans – had already closed in March. The Christmas theme was done as a marketing idea over the holidays.
“Our revenues grew by 7%, but this wasn’t enough to offset the increased cost,” Lee said.
The ferry service was instituted to help Rising Star compete with gaming properties in near
Cincinnati and Louisville. The ferry service launched last for free, initially to build ridership. It costs about $600,000 a year to operate.
In March, Rising Star began charging $5 a car for the ferry, but the ride was still free to casino patrons with loyalty cards.
“Ridership stayed high for the two weeks that we operated it before Indiana gaming regulators made us close the casino (due to the pandemic),” Lee said.
“We’ve been operating it for just over a year and it took us over two years before that to get all the approvals to operate it,” Lee said. “To shut it down now would be silly. If I’m right, and the data shows that the ferry is a plus for us, then we should continue to run it long term.”
Lee, 63, became Full House CEO after leading an investor group that controlled 6.2% of the company’s stock in a two-month proxy battle for control of the casino operator. Lee is the former CEO of Pinnacle Entertainment and a longtime gaming financial executive. He was CFO of Mirage Resorts in the 1990s.
Shares of Full House closed at $1.54 Thursday, down 11 cents or 4.94%.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
