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Z Capital to buy casino gaming company Affinity Gaming

Z Capital Partners has agreed to acquire Las Vegas-based casino gaming operator Affinity Gaming for $17.35 per share in cash, putting it at a valuation of about $580 million. Citizen Bank N.A. provided $465 million in debt funding to Z Capital to support the transaction. The deal is expected to close in the first quarter of 2017.

PRESS RELEASE

NEW YORK, August 23, 2016 — Z Capital Partners, L.L.C. (“Z Capital”), the private equity management arm of Z Capital Group, L.L.C., a leading global alternative investment manager focused on opportunistic, value-oriented private equity and credit funds, and Affinity Gaming (“Affinity”), a diversified casino gaming operator, today announced that affiliates of Z Capital and Affinity have entered into a definitive agreement for such affiliates of Z Capital to acquire Affinity in an all-cash transaction that values Affinity at approximately $580 million.

Under the terms of the agreement, Z Capital and its affiliates, which currently own approximately 41 percent of Affinity’s outstanding shares, will purchase Affinity’s remaining outstanding shares for $17.35 per share in cash. Z Capital has received a debt financing commitment in the amount of $465 million from Citizens Bank, N.A.

“We are pleased to enter into the agreement to purchase Affinity and transition from the largest shareholder to sole controlling shareholder,” said James Zenni, President and Chief Executive Officer of Z Capital and a member of the Affinity Board of Directors since 2014. “Affinity brings a compelling offer to consumers by providing high quality entertainment at affordable prices in attractive markets, and I am confident that Z Capital is uniquely positioned to grow the business for years to come. We look forward to leveraging our broad expertise across the hospitality, restaurant, retail and consumer sectors to help Affinity continue to expand, while driving profitability through operating improvements and enhanced efficiencies.”

Affinity’s Board of Directors (the “Board”) formed a special committee of independent directors (the “Special Committee”) after receiving a nonbinding proposal from Z Capital in which Z Capital proposed to acquire all of the outstanding shares of Affinity that are not already owned by Z Capital and its affiliates for $15.00 per share in cash.

The Special Committee was authorized to review Z Capital’s proposal, as well as other proposals or strategic alternatives that may be available to the Company. On August 9, 2016, Z Capital increased its proposal from $15.00 to $17.35 per share in cash. After evaluating the new proposal and its material terms, the Special Committee concluded that the transaction with Z Capital is advisable, fair to and in the best interests of Affinity and its stockholders (other than Z Capital and its affiliates). The Board, acting upon the recommendation of the Special Committee, approved the transaction and has recommended that the Company’s stockholders vote to approve the transaction.

“I am pleased to announce this agreement, as it delivers significant value to Affinity’s shareholders,” said David Reganato, Chairman of the Board and the Special Committee. “Today’s announcement is the result of a comprehensive process in which the Special Committee, with the assistance of its outside advisors, carefully considered strategic alternatives for our shareholders. In connection with this process, affiliates of Z Capital made a definitive offer to acquire Affinity.”

Founded in 2010 and headquartered in Las Vegas, Nevada, Affinity offers accessible, value-oriented casino entertainment in a welcoming and casual atmosphere. It currently has 11 locations in key markets across Nevada, Colorado, Missouri and Iowa.

The transaction is expected to close in the first quarter of 2017, subject to the approval by Affinity shareholders, regulatory approvals, including by gaming regulators in the four states in which Affinity is licensed, expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and other customary closing conditions. As of August 22, 2016, shareholders representing approximately 69% of Affinity’s outstanding shares have entered into voting agreements in support of the transaction.

Sidley Austin LLP served as Z Capital’s legal advisor. Deutsche Bank Securities Inc. as 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 $2.2 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.