Eldorado Resorts disposes of two properties to prepare for Caesars acquisition

Eldorado Resorts announced Thursday it has entered into a definitive agreement to sell Isle of Capri Casino Kansas City in Missouri and Lady Luck Casino Vicksburg in Mississippi to Rhode Island-based Twin River Worldwide Holdings for $230 million in cash.

"The sale is relatively small compared to the ($17.3 billion) acquisition of Caesars, but it does help free up some balance sheet capacity to help finance the larger acquisition," said Union Gaming analyst John DeCree.

The sale of the regional properties is expected to close early next year, while the acquisition of Caesars, announced on June 24, is subject to regulatory approvals and other customary closing conditions and is expected to close in early 2020.

Twin River has plans to “substantially reposition” the casino in Kansas City, according to a statement from the company. It has already released renderings for concepts of how it can redevelop the riverboat casino.

"We believe these assets are a great fit for our portfolio," Twin River President and CEO George Papanier said in a statement from the company.

As reported by Las Vegas Review-Journal, the sales play into Eldorado’s strategy to cut out smaller assets; the company sold three regional properties last month for $385 million.

“The intention here is to accomplish two things,” Jefferies analyst David Katz said. “One, to focus on areas that would overlap with Caesars, and two, to pursue transactions that would reduce the profile and leverage as much as they can prior to the deal closing.”

The multibillion-dollar deal between Caesars and Eldorado would create the largest casino company by U.S. gaming assets, and the Federal Trade Commission may require the company to divest some of its properties. The sale of the Mississippi and Missouri properties likely eases FTC concerns in the Kansas City area, according to a Deutsche Bank report led by analyst Carlo Santarelli.

But even with the Twin River transaction, Eldorado would have around 60 assets after the Caesars acquisition.