Shareholders sue over gaming merger

Thursday, March 16, 2000 | 11:11 a.m.

THE ASSOCIATED PRESS

GLENDALE, Calif. -- Pinnacle Entertainment Inc., a casino company formerly known as Hollywood Park Inc., was sued by an investment group that said its members wouldn't get enough money for their shares in a proposed $1.3 billion buyout by rival Colony Capital Inc.

Glendale-based Pinnacle said March 8 it had received a $25-per-share offer from Los Angeles-based Colony, the closely held owner of Harveys Casino Resorts, which would also assume more than $600 million in debt. Pinnacle said Wednesday it is evaluating the proposal.

In a lawsuit made public Wednesday in Delaware Chancery Court in Wilmington, Harbor Finance Partners claim Pinnacle directors have a duty to get the highest possible price for the stock but favor the Colony acquisition because they will keep their jobs.

The company directors "have not considered or encouraged other potential purchasers of Pinnacle," the partners say in the suit. They ask a judge to order Pinnacle directors to auction Pinnacle to the highest bidder and award damages and legal fees.

Pinnacle, which operates eight casinos in Nevada, Mississippi, Louisiana and Argentina, sold Hollywood Park racetrack last year. Colony, with four casinos and resorts in Nevada, Iowa and Colorado, and a stake in the U.K.'s Savoy hotels, is headed by Thomas Barrack, once a money manager for Texas's Bass Family.