Z Capital’s Affinity Gaming Seeks to Raise $150 Million for SPAC

(Bloomberg) -- Affinity Gaming, a casino operator owned by Z Capital, plans to raise $150 million for a special purpose acquisition company, according to people with knowledge of the matter.

The SPAC, Las Vegas-based Gaming & Hospitality Acquisition Corp., intends to combine with Affinity as well as an entity that it hasn't yet identified, a presentation to potential investors shows. That differs from most SPACs, which typically raise money to buy an undetermined target.

The target firm ideally will be valued at $500 million or more, including debt, to form a company with an enterprise value of more than $1 billion.

The new blank-check firm has filed confidential paperwork with the Securities and Exchange Commission. The deal could be upsized within a traditional 20% range, and by an additional 15% if underwriters opt to exercise a so-called greenshoe.

Z Capital, led by founder and Chief Executive Officer Jim Zenni, has owned Affinity since 2017. The casino operator, with locations in Iowa, Missouri and Nevada, expects to generate earnings before interest, taxes, depreciation and amortization of about $80 million in 2020, valuing it at about $700 million including debt, according to one of the people.

A Z Capital spokeswoman declined to comment.

Orphan Properties

Affinity's potential target may include other regional gambling companies including those that make technology, equipment or operate digital platforms, so-called orphan properties being sold by casino operators, or businesses that are focused on distributed gaming. The latter, also known as slot routes, is legal in states including Illinois and involves the fitting of slot machines at gathering places such as truck stops, bars and restaurants.

Gaming & Hospitality Acquisition Corp. is led by Affinity CEO Mary Beth Higgins, formerly an executive at Vici Properties Inc. and its predecessor, a unit of Caesars Entertainment Inc. The SPAC's board includes Caesars board member and former Las Vegas Mayor Jan Jones Blackhurst, longtime industry executive Daniel Cassella and former Ladbrokes CEO Richard Glynn.

See also: TPG to Plan ESG, Tech Blank-Check IPOs Amid SPAC Boom

Last year, gaming company Accel Entertainment Inc. went public through a merger with TPG Pace Holdings Corp., a SPAC sponsored by an affiliate of private equity firm TPG.

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