Hollywood Casino sues former CEO
February 20, 2002

Dallas-based Hollywood Casino Corp. charged Tuesday in a lawsuit that former chairman Jack Pratt and Dallas investor Harold Simmons violated U.S. securities laws by not disclosing their plans to take control of the company.

The federal suit was the second filed in the last five days in a dispute that began when Mr. Pratt was removed as chairman and chief executive in August. In a state suit on Friday, Hollywood Casino accused Mr. Pratt of using company funds for personal use.

Through their attorneys, Mr. Pratt and Mr. Simmons both denied the allegations.

"I think a lot of shareholders are unhappy with the way this management team is lining their pockets and entrenching themselves," said Brian Lidji, Mr. Pratt's attorney. "Mr. Pratt is interested in seeing the company sold, and management is opposing those efforts, and that's what these lawsuits are about."

In addition to Mr. Pratt and Mr. Simmons, the federal suit names Mr. Pratt's brother William Pratt, who had been the company's secretary and general counsel.

In August, Jack Pratt was replaced as the company's chairman and chief executive by Edward T. Pratt III, a nephew.

Bill Brewer, the attorney for Hollywood Casino, said the federal lawsuit centered on the failure of the Pratt brothers, Mr. Simmons and their affiliates to disclose that they were acting as a group and planned to buy stock to gain control of the company.

Both of these activities should have been reported to the Securities and Exchange Commission, Mr. Brewer said. Proper disclosure takes on added significance for a company engaged in gambling because of oversight by state gaming authorities, he said.

Jack and William Pratt own 34 percent of Hollywood Casino, the company said.

Affiliates of Mr. Simmons, a veteran of many high-stakes corporate battles, have acquired 4 percent to 5 percent of the company's stock while possessing information about the company not available to the public, the suit says.

The company is asking the court to compel full disclosure, prevent the group from buying more stock and block the voting rights on existing shares.

The state lawsuit results from audits conducted by an outside accounting firm after the change in leadership in August. The accountants found misuse of funds and undisclosed dealings with family members, the suit says.

Jack Pratt can account for any money spent on behalf of the company, Mr. Lidji said. He also said the lawsuits were an attempt by the company to renege on Mr. Pratt's stock options and pensions.

The suits came after Jack Pratt notified Hollywood Casino management Friday that he intended to exercise his option to buy 750,000 shares of stock, Mr. Lidji said.

Hollywood Casino, with revenue of $ 348.2 million in 2000, operates casinos with a movie motif in Illinois, Louisiana and Mississippi. Its stock closed Tuesday at $ 10.75 a share, down 65 cents.

Eric Hausler, an analyst with Bear Stearns & Co., said that Hollywood Casino's finances were poised for an upswing in 2002 but that it was too early to assess the impact of the lawsuits.

"This is all new to us, and we're trying to sort it all through," Mr. Hausler said.

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