Santa Fe settles suit against shareholder

Tuesday, May 8, 2001 | 10:26 a.m.

A three-year-old legal feud between Santa Fe Gaming Corp. of Las Vegas and a large shareholder has finally ended.

Santa Fe announced in a filing with the Securities and Exchange Commission that it has settled a 1999 lawsuit against David Lesser, head of New York investment firm Hudson Bay Partners LP. Also settled was a 1999 lawsuit originally filed by Station Casinos Inc. against Lesser; Station assigned its rights under this lawsuit to Santa Fe later that year.

Lesser began purchasing Santa Fe preferred stock in 1997, and tried unsuccessfully to force Santa Fe Gaming into bankruptcy in late 1998 after subsidiary Pioneer Finance Corp. missed bond payments. Pioneer Finance did go into bankruptcy, but a judge ruled Santa Fe was not required to also enter bankruptcy. Santa Fe later sued Lesser, accusing him of attempting to take over the company.

Station had alleged that Lesser had access to confidential Station marketing documents when he acted as Station's primary contact at Crescent Real Estate Equities Co., whose merger with Station fell apart in 1998. Station then accused Lesser of using this information in his efforts to take over Santa Fe Gaming.

In its SEC filing, Santa Fe said it has agreed to acquire 3.46 million preferred shares from Lesser, representing about 40 percent of Santa Fe's outstanding preferred stock. Lesser has also agreed to resign from the company's board of directors, Santa Fe said, and will not stand for election to the board at the company's May 11 annual shareholders meeting.

The purchase price of the preferred stock was not disclosed.

Santa Fe sold the Santa Fe hotel-casino in North Las Vegas to Station Casinos Inc. for $205 million, and used the funds to recapitalize Pioneer Finance. Santa Fe's assets now include the Pioneer hotel-casino in Laughlin and a land parcel on the north end of the Las Vegas Strip.