In partnership with VICI, for nearly USD 107 million

Century acquires three casinos from Eldorado Resorts

Upon closing this transaction, Century’s portfolio will increase to 10 casinos in North America that include over 6,700 gaming machines and 150 table games.
2019-06-19
Reading time 3:06 min
Riverboats Isle Casino Cape Girardeau and Lady Luck Caruthersville in Missouri, and Mountaineer Casino, Racetrack and Resort in West Virginia. VICI Properties will acquire the real estate assets of the three properties for about USD 278.0 M, and Century will enter into a triple-net lease agreement. The transaction is expected to close in early 2020.

Century Casinos announced Monday that it has entered into a definitive agreement to acquire the operations of Isle Casino Cape Girardeau ("Cape Girardeau"), Lady Luck Caruthersville ("Caruthersville") and Mountaineer Casino, Racetrack and Resort ("Mountaineer") from Eldorado Resorts for approximately $107.0 million.

Simultaneous with the closing of the transaction, VICI Properties will acquire the real estate assets of the three properties for approximately $278.0 million, and Century will enter into a triple-net lease agreement with VICI for the three casino properties. The lease will have an initial annual rent of approximately $25.0 million and an initial term of 15 years, with four five-year renewal options.

The purchase price represents an implied trailing twelve-month pro-forma earnings before interest, taxes, depreciation and amortization (EBITDA) multiple of 4.1x for the three casinos. The multiple excludes any potential cost synergies and operational improvements. The acquisition is expected to meaningfully enhance Century’s free cash flow as well as be immediately accretive to earnings.

The company will finance the $107.0 million purchase with a new credit facility that is anticipated to be issued by Macquarie Capital. On a pro-forma basis, Century estimates this will result in total leverage of 3.5x and net leverage of 2.2x. It expects to quickly deliver given the growth across its existing portfolio, newly acquired properties and the ramp-up of Century Mile Racetrack and Casino.

“This transaction further highlights our commitment to enhancing shareholder value,” Erwin Haitzmann, Co-Chief Executive Officer of Century Casinos remarked. “Cape Girardeau, Caruthersville and Mountaineer expand the strategic diversity of Century Casinos with attractive assets in strong, stable markets. The expected increase to our free cash flow will allow us to remain well positioned to reduce leverage and evaluate additional strategic growth opportunities,” Haitzmann added.

“The acquisition of the operations of Cape Girardeau, Caruthersville and Mountaineer will transform Century Casinosinto a premier regional casino operator in North America,” Peter Hoetzinger, Co-ChiefExecutive Officer of Century Casinos remarked. “We believe these assets are a great fit for our portfolio and will complement Century Casinos’ expertise in operating small to mid-sized casinos. We are pleased to partner with VICI Properties to structure this transaction in a manner that we expect will be immediately accretive to our operating results,” Hoetzinger concluded.

Isle Casino Cape Girardeau is located in Cape Girardeau, Missouri, approximately 120 miles south of St. Louis, Missouri, overlooking the Mississippi river. The property opened in 2012 and consists of a dockside casino featuring 41,500 square feet of casino space, 863 gaming machines, 20 table games, three dining venues, a pavilion and an entertainment center. The property also includes a wide variety of non-gaming amenities, including an events center.

Lady Luck Caruthersville is a riverboat casino located along the Mississippi River in Caruthersville, Missouri. The property opened in 1995 and consists of a dockside casino featuring 21,000 square feet of casino space, 507 slot machines, nine table games, two dining venues, a 40,000 square foot pavilion and a 28-space RV park.

Mountaineer Casino, Racetrack and Resort is a hotel, casino, entertainment and live thoroughbred horse racing facility located in New Cumberland, West Virginia, one hour from downtown Pittsburgh, Pennsylvania. The property originally opened in 1951 with the casino opening in 1994 and features a 357-room hotel, approximately 1,486 slot machines, 36 table games, a poker room, a racetrack and five dining venues.

Upon closing this transaction, Century’s portfolio will increase to 10 casinos in North America that include over 6,700 gaming machines and 150 table games. On a pro-forma trailing twelve-month basis the company expects to generate 96% of its Adjusted EBITDA before rent from its North American casinos.

The transaction, which is expected to close in early 2020, is subject to antitrust approval and approvals of the Missouri Gaming Commission and the West Virginia Lottery as well as other customary closing conditions. Stifel is acting as exclusive financial advisor and Faegre Baker Daniels LLP is acting as legal counsel to the company in connection with the transaction.

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