Century Casino & VICI Buys Eldorado Resorts Properties

Several Big Casinos Are Pending Sale To New Owners

June 19, 2019 3:19 pm

Two Missouri casinos are expecting a change in ownership. The transaction is expected to be completed by early 2020.

Eldorado Resorts has sold the Mountaineer Casino, Racetrack and Resort in New Cumberland, West Virginia, and the Isle Casino in Cape Girardeau, and Lady Luck Casino in Caruthersville, Missouri to Century Casinos who purchased the properties in partnership with VICI Properties Inc. VICI Properties Inc owns and operates several entertainment, gaming, and hospitality destinations. Century Casinos is a global casino operator; thus, their partnership seems flawless.

The Eldorado Resort properties’ land, real estate, and operating assets were acquired by the two companies for a total of $385 million. The deal, however, must still receive antitrust approval and regulatory approval from the West Virginia Lottery and Missouri Gaming Commission before the amount can be paid out. Nonetheless, the deal will knock Eldorado Resorts out of the market as it operates 26 gaming properties in 12 US states: Ohio, West Virginia, Florida, Nevada, Missouri, Mississippi, Illinois, New Jersey, Colorado, Indiana, Iowa, and Louisiana.

CEO of Eldorado Resorts Tom Reeg expressed the reasoning behind the deal in a press release, “The agreements to divest Mountaineer Casino, Isle Casino Cape Girardeau and Lady Luck Casino Caruthersville are consistent with our continued focus on optimizing the results from our regional gaming platform, generating growth through strategic acquisitions and realizing value through sales. The sale price for these three properties represents an attractive multiple of their aggregate trailing 12 months cash flows and provides additional capital that we expect to deploy for shareholder value enhancing initiatives. Following the completion of these transactions, Eldorado will continue to benefit from our geographically diverse portfolio of regional gaming assets that we believe have potential for further margin growth and increased cash flow.”

Once the transaction is completed, Century Casinos will enter a triple-net lease agreement with VICI Properties. The initial annual rent for the properties will be estimated at $25 million with a 15-year term, including four 5-year renewal options. Century Casinos’ portfolio will increase after the transaction is completed by holding ten casinos in North America and enhance the company’s free cash flow.

Century Casino is expected to finance the transaction on their part of $107 million through a new credit facility issued by Macquarie Capital. Co-Chief Executive Officer Erwin Haitzmann says, “This transaction further highlights our commitment to enhancing shareholder value. 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.” Century Casinos estimates its total leverage as 3.5x and net leverage as 2.2x.

Peter Hoetzinger, Co-Chief Executive Officer of Century Casinos, added, “The acquisition of the operations of Cape Girardeau, Caruthersville and Mountaineer will transform Century Casinos into a premier regional casino operator in North America.”

While these venues have not been known to offer 18+ casino gambling, those who are at least eighteen years of age can utilize offshore casinos or casinos in neighboring states which provide 18+ gambling.

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