Meadows to be bought by Australian company
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Crown Limited (ASX: CWN) announced today that it had signed an agreement to acquire 100 percent of the equity interests in Cannery Casino Resorts LLC (“CCR”), owner of The Meadows racetrack, on a cash and debt free basis for $1.752 billion plus acquisition costs (estimated to be approximately $49.6 million).
The completion of the transaction and financial closing will not occur until Crown, an Australian company, has received all of the necessary gaming approvals required to own and operate the casinos within the CCR portfolio. This includes approvals from the Nevada Gaming Commission, Pennsylvania Gaming Control Board and the Pennsylvania Harness Racing Commission. It is estimated that this process will take at least 12 months.
Accordingly, finalization of the acquisition of CCR is expected to occur after all construction on East Side Cannery is complete and The Meadows permanent facility is close to completion. The vendors are responsible for finalization of the construction of East Side Cannery and The Meadows permanent facility and the purchase price paid by Crown will be reduced to the extent that there is any construction capital expenditure remaining to be spent at completion. The purchase price is also subject to an adjustment ependant on the actual timing of the receipt of the necessary gaming approvals.
Crown’s CEO Mr. Rowen Craigie said, “The acquisition of CCR is strategically and financially compelling for Crown. CCR provides Crown with an entry point into the US local casino industry via a well managed and successful company.
“CCR presents Crown with high quality new or near new facilities without exposure to construction risk and without high capital expenditure requirements.”
On completion, the acquisition will be funded from Crown’s existing cash reserves and is expected to be accretive to Crown’s earnings per share.
- The Cannery Hotel and Casino in North Las Vegas, Nevada
- Nevada Palace Casino on the Boulder Strip in East Las Vegas, Nevada
- Rampart Casino in Summerlin (West Las Vegas), Nevada (operated under a management contract)
- The Meadows Racetrack & Casino (temporary facility) located in Pittsburgh, Pennsylvania
CCR is also developing two casino/hotel complexes which are expected to be completed or substantially completed prior to financial close of the acquisition:
- East Side Cannery in East Las Vegas, Nevada with an expected completion date of September 2008 (which will replace the existing Nevada Palace)
- The Meadows Racetrack & Casino permanent facility with an expected completion date of April 2009 (which will replace the existing temporary facility)
At completion of these two construction projects, CCR will operate approximately 8,400 slots and 75 tables and over 720 hotel rooms throughout its properties.
CCR is owned by Millennium Gaming Inc. (58 percent), which is a joint venture between Bill Paulos and Bill Wortman, and entities managed by Oaktree Capital Management, LP through affiliates (42 percent).
The Executive Chairman of Crown, Mr. James Packer, said “CCR’s existing shareholders -- Bill Paulos, Bill Wortman and Oaktree -- have created first class local properties located in markets with attractive, long term growth prospects. Crown’s skills and experience in operating successful local casinos will enable us to grow the CCR business further.”
CCR’s joint CEO and part owner, Mr. Bill Paulos, said, “Crown is a world class operator. We absolutely believe that Crown’s acquisition of Cannery Casino Resorts is a great fit for our company and the future of our employees.\" (Millennium Gaming press release)