Santa Fe dissident allowed to vote at today’s meeting

John Wilen

Monday, May 3, 1999 | 10:30 a.m.

LAUGHLIN -- A federal judge in Las Vegas denied a Santa Fe Gaming Corp. attempt to block a dissident shareholder from voting his shares for an alternative slate of directors at the company's annual meeting today.

On Friday, U.S. District Court Judge Johnnie B. Rawlinson denied Santa Fe's request for a preliminary injunction to block Hudson Bay Partners LP and its general manager, David Lesser, from voting the 33.2 percent of Santa Fe preferred stock they own in favor of two special company directors.

Because Santa Fe has missed dividend payments on the preferred shares for two straight years, preferred shareholders have the right to elect two directors to the board for the first time. The special directors will increase the board's size to eight.

Lesser and Hudson Bay have purchased their shares since late last year. Over the same period, they have used their ownership of debt in a Santa Fe subsidiary, Pioneer Finance Corp., to try to force Santa Fe into bankruptcy. That attempt was thwarted by a bankruptcy court judge earlier this year.

Santa Fe sued Lesser and Hudson Bay, seeking to block them from voting today and claiming Lesser was using knowledge gained while working as a consultant for a separate company to try to gain control of Santa Fe. Lesser and Hudson Bay say they are simply trying to get a promised return on an investment.

Friday's ruling clears the way for Lesser to vote the Hudson Bay shares at today's meeting. In papers filed in the bankruptcy cases and federal lawsuit, Lesser has called for Santa Fe to add more independent directors to its board to give the company more independent oversight. Santa Fe is controlled by chairman Paul Lowden, who owns more than 50 percent of its common voting stock.

Rawlinson gave no reason for her decision. A separate reasoning order will be issued later, she said.