Texas casino operator sues key figures

Friday, Feb. 22, 2002 | 10:54 a.m.

A feud has erupted between family members for control of a Texas casino operator.

Hollywood Casino Corp. of Dallas, operator of riverboat casinos in Illinois, Mississippi and Louisiana, filed suit in Texas federal court against Jack Pratt, the company's founder, former chief executive and largest shareholder. The lawsuit, alleging violations of securities laws, also named former Hollywood General Counsel William Pratt and shareholder Harold Simmons of Dallas as defendants. The two Pratts control 34 percent of Hollywood's stock, and both are current directors of Hollywood.

Jack Pratt was hit with a second lawsuit in Texas state court, in which Hollywood accused him of misappropriation of company funds and breach of fiduciary duties. Firing back, Jack Pratt claimed the lawsuits were little more than an attempt by Hollywood executives to wipe out his stock options and pension.

Hollywood's current chairman and chief executive is Edward Pratt III, the nephew of both Jack and William Pratt. Jack and William Pratt have been pushing for the sale of the company.

Hollywood's federal lawsuit accused the two Pratts and Simmons of plotting a proxy battle for control of Hollywood without properly reporting those plans. It also claimed Simmons acquired 4 percent to 5 percent of Hollywood's stock while in possession of "non-public material information" about the company. The company is seeking an order that would bar the three defendants from further stock purchases and from voting their shares in a proxy contest for control of the company.

The state lawsuit against Jack Pratt seeks restitution for alleged "improper actions," and an order that would relieve Hollywood from its financial obligations under Pratt's employment agreement.

"These lawsuits reflect a commitment on the part of the company, its audit committee and the independent members of its board of directors to ensure that the company is operated at the highest standards and in the interest of every stockholder," said Hollywood director Oliver Revell, chairman of the company's audit committee.

Not surprisingly, Jack Pratt doesn't see it that way.

"This is all about the management of Hollywood wanting to keep their cushy jobs and golden parachutes," said Brian Lidji, Jack Pratt's attorney. "I think a lot of shareholders are unhappy with the way this management team is lining their pockets and entrenching themselves. Mr. Pratt is interested in seeing this company sold, and management is opposing these efforts, and that's what these lawsuits are all about."

The lawsuits were filed shortly after Jack Pratt notified the company of his plans to exercise options to buy 750,000 Hollywood shares, Lidji said.

"We categorically deny these vague and unsubstantiated allegations," Lidji said. "Neither Mr. Pratt, his brother (William Pratt) nor Mr. Simmons are engaged in any kind of conspiracy against Hollywood Casino's management."