Churchill Downs Incorporated ("CDI" or "Company") (Nasdaq:CHDN)
announced today, Friday, October 5, 2012, that it has entered into
a definitive purchase agreement to acquire Riverwalk Casino and
Hotel ("Riverwalk" or "Sellers") in Vicksburg, Miss., for total
consideration of approximately $141 million, to be paid in cash.
The transaction, which is contingent upon the
Company securing a gaming license from the Mississippi Gaming
Commission and other usual and customary closing conditions, is
anticipated to close by the end of the year. If certain closing
conditions are not satisfied, the Company could be obligated to pay
a $7 million termination fee.
The transaction price represents a multiple of approximately 7.4
times the property's trailing twelve month EBITDA (earnings before
interest, taxes, depreciation and amortization) and will be funded
through the Company's existing credit facility. While the
acquisition is an equity transaction, for tax purposes it will be
treated as an asset transaction which the Company expects will
provide tax benefits that will effectively reduce the transaction
price multiple to approximately 6.4 times the property's trailing
twelve month EBITDA.
The transaction is expected to be immediately accretive to
earnings per share by approximately $0.31.
Based on historical performance, the Company
estimates that Riverwalk's annual impact is expected to be
approximately $55 million in revenue (net of promotional
allowances), $19 million in EBITDA, and $9.9 million in free cash
flow (EBITDA minus maintenance capital, interest and taxes).
CDI Chairman and CEO Robert L. Evans said this
acquisition continues to reflect CDI's commitment to the Company's
growth via diversification strategy.
"We are excited to have another property in the
business-friendly state of Mississippi to add to our Harlow's
Casino Resort & Hotel property in Greenville, located 90 miles
north of Riverwalk along the Mississippi River," Evans said.
"Riverwalk is an attractive investment for CDI as it is a newer
facility with superior design, high quality amenities and is
operated by an outstanding team of over 400 employees with whom we
look forward to working in the near future. We continue to look for
opportunities to invest capital in growth opportunities, and we are
hopeful that other jurisdictions, such as Kentucky and Illinois,
will offer us a similar opportunity to invest and create jobs in
the near future."
Greg Carlin, CEO of Riverwalk and Rush Street
Gaming, said, "We're grateful to the entire Riverwalk team for its
dedication and hard work in making Riverwalk the best casino in
Vicksburg." Carlin went on to note that, "Operations at our
remaining casinos in the U.S. and Canada are unaffected by this
transaction and we continue to pursue new development
opportunities."
Riverwalk, which is located on approximately 22
acres of land in Vicksburg, Miss., on the Mississippi River less
than one mile from Interstate 20, features a 25,000-square-foot
single-level gaming floor with 723 Class III slot machines and 18
table games; a five-story, 80-room attached hotel; a
5,600-square-foot multi-functional event center overlooking the
river; and two separate dining areas. Of the 19 Mississippi casinos
located along the Mississippi River, Riverwalk was one of the two
facilities that were not forced to close in 2011 due to record
flooding.
The property, which opened in October 2008, is
operated by Magnolia Hill, LLC and is owned by High River Gaming,
LLC; JB3 Corporation; and Taiman Holdings Corporation. Neil Bluhm
is the largest principal in Riverwalk with an approximately 70
percent equity position.
Sidley Austin LLP is acting as legal advisor to the Company in
this transaction. Macquarie Capital is acting as financial advisor
and Perkins Coie, LLP is acting as legal advisor to the Sellers in
this matter.
About Churchill Downs
Incorporated
Churchill Downs Incorporated ("CDI") (Nasdaq:CHDN),
headquartered in Louisville, Ky., owns and operates the
world-renowned Churchill Downs Racetrack, home of the Kentucky
Derby and Kentucky Oaks, as well as racetrack and casino operations
and a poker room in Miami Gardens, Fla.; racetrack, casino and
video poker operations in New Orleans, La.; racetrack operations in
Arlington Heights, Ill.; and a casino resort in Greenville, Miss.
CDI also owns the country's premier advance-deposit wagering
company, TwinSpires.com; the totalisator company, United Tote;
Bluff Media, an Atlanta-based multimedia poker content, brand and
publishing company; and a collection of racing-related
telecommunications and data companies. Information about CDI can be
found online at www.churchilldownsincorporated.com.
Information set forth in this news release contains
various "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Private Securities Litigation Reform Act
of 1995 (the "Act") provides certain "safe harbor" provisions for
forward-looking statements. All forward-looking statements made in
this Quarterly Report on Form 10-Q are made pursuant to the
Act.
The reader is cautioned that such forward-looking
statements are based on information available at the time and/or
management's good faith belief with respect to future events, and
are subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in
the statements. Forward-looking statements speak only as of the
date the statement was made. We assume no obligation to update
forward-looking information to reflect actual results, changes in
assumptions or changes in other factors affecting forward-looking
information. Forward-looking statements are typically identified by
the use of terms such as "anticipate," "believe," "could,"
"estimate," "expect," "intend," "may," "might," "plan," "predict,"
"project," "hope," "should," "will," and similar words, although
some forward-looking statements are expressed differently. Although
we believe that the expectations reflected in such forward-looking
statements are reasonable, we can give no assurance that such
expectations will prove to be correct. Important factors that could
cause actual results to differ materially from expectations
include: the effect of global economic conditions, including any
disruptions in the credit markets; a decrease in consumers'
discretionary income; the effect (including possible increases in
the cost of doing business) resulting from future war and terrorist
activities or political uncertainties; the overall economic
environment; the impact of increasing insurance costs; the impact
of interest rate fluctuations; the effect of any change in our
accounting policies or practices; the financial performance of our
racing operations; the impact of gaming competition (including
lotteries, online gaming and riverboat, cruise ship and land-based
casinos) and other sports and entertainment options in the markets
in which we operate; our ability to maintain racing and gaming
licenses to conduct our businesses; the impact of live racing day
competition with other Florida, Illinois and Louisiana racetracks
within those respective markets; the impact of higher purses and
other incentives in states that compete with our racetracks; costs
associated with our efforts in support of alternative gaming
initiatives; costs associated with customer relationship management
initiatives; a substantial change in law or regulations affecting
pari-mutuel and gaming activities; a substantial change in
allocation of live racing days; changes in Kentucky, Florida,
Illinois or Louisiana law or regulations that impact revenues or
costs of racing operations in those states; the presence of
wagering and gaming operations at other states' racetracks and
casinos near our operations; our continued ability to effectively
compete for the country's horses and trainers necessary to achieve
full field horse races; our continued ability to grow our share of
the interstate simulcast market and obtain the consents of
horsemen's groups to interstate simulcasting; our ability to enter
into agreements with other industry constituents for the purchase
and sale of racing content for wagering purposes; our ability to
execute our acquisition strategy and to complete or successfully
operate planned expansion projects; our ability to successfully
complete any divestiture transaction; market reaction to our
expansion projects; the inability of our totalisator company,
United Tote, to maintain its processes accurately or keep its
technology current; our accountability for environmental
contamination; the ability of our online business to prevent
security breaches within its online technologies; the loss of key
personnel; the impact of natural and other disasters on our
operations and our ability to obtain insurance recoveries in
respect of such losses (including losses related to business
interruption); our ability to integrate any businesses we acquire
into our existing operations, including our ability to maintain
revenues at historic levels and achieve anticipated cost savings;
the impact of wagering laws, including changes in laws or
enforcement of those laws by regulatory agencies; the outcome of
pending or threatened litigation; changes in our relationships with
horsemen's groups and their memberships; our ability to reach
agreement with horsemen's groups on future purse and other
agreements (including, without limiting, agreements on sharing of
revenues from gaming and advance deposit wagering); the effect of
claims of third parties to intellectual property rights; and the
volatility of our stock price.
CONTACT: Courtney Yopp Norris
(502) 636-4564
Courtney.Norris@kyderby.com
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