Casino news source: Inside Indiana Business -
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[quote]Resorts East Chicago Being Acquired by Ameristar
InsideINdianaBusiness.com Report
4/24/2007 5:21:19 PM
Nevada-based Ameristar Casinos, Inc. has now signed a definitive agreement to purchase Resorts East Chicago casino for $675 million in cash. Ameristar says it plans to make several capital improvements to the property, including expanded gaming opportunities, expanded parking facilities and improvements to other amenities. The deal is subject to approval by gaming regulatory authorities. Resorts East Chicago includes the 53,000-square-foot casino and 291-room hotel.
Source: Inside INdiana Business
Press Release
Las Vegas, Nev. -- Ameristar Casinos, Inc. (Nasdaq: ASCA) today announced that it has entered into a definitive agreement with Resorts International Holdings, LLC to acquire its subsidiary that owns and operates Resorts East Chicago for $675 million in cash, subject to satisfactory completion of due diligence, receipt of regulatory approvals and other customary closing conditions.
Resorts East Chicago is located in East Chicago, Indiana, an approximately 25-mile drive from downtown Chicago, Illinois, and is easily accessible from the entire Chicago metropolitan area. The Chicagoland market is the third largest commercial gaming market in the United States, generating more than $2.5 billion in gaming revenues annually and serving approximately 6.4 million adults. The Chicagoland market is significantly underserved compared with
other domestic regional gaming markets.
John Boushy, CEO and President of Ameristar, said, "We believe the Chicagoland market has tremendous growth potential, and we are confident in our ability to compete successfully there. We moved quickly to acquire Resorts East Chicago because it hits the bulls-eye of our acquisition criteria -- it allows us to enter an extremely attractive market, diversifies our cash flow, enhances our distribution channels, and provides a platform from which we can substantially grow an already well-positioned property, while achieving an appropriate return. By applying Ameristar's proven management model, operational discipline and development expertise, we expect to compete effectively in this dynamic market. This strategically compelling acquisition will significantly contribute to Ameristar's ability to achieve our aggressive growth plans to double our EBITDA over the next three to five years."
Resorts East Chicago currently features a 53,000-square-foot casino and premier 291-room hotel. The property generated $325.6 million in gross gaming revenue in 2006 and, based upon information available to date, is expected to produce EBITDA in the mid-$60 million range in 2007. The casino offers four levels of gaming, featuring approximately 1,900 slot machines, 60 table games and 16 poker tables. The property's streetscape features a 280-seat buffet, 80-seat steakhouse, 140-seat sports bar, 76-seat diner, 17-seat pizza outlet, players' club facilities and meeting rooms. The hotel and casino are served by a 3,000-space parking garage. Located in Indiana, Resorts East Chicago benefits from a historically stable regulatory environment which, unlike Illinois, has no restrictions on the number of gaming positions at each casino.
Ameristar intends to make a number of major capital improvements to Resorts East Chicago in order to leverage the opportunities within the dynamic Chicagoland market and maximize its return on investment. Though still in the early planning stages, Ameristar intends to significantly expand the gaming facilities, improve access to the casino, build additional structured parking and upgrade the non-gaming amenities, all with the objective of creating best- in-class offerings and experiences consistent with Ameristar's high standards. When expanding the property, Ameristar will benefit from its experience in St. Charles, Missouri, wherethe Company turned an undersized property generating approximately $26 million in annual EBITDA in 2000 into one of the nation's best regional casino-entertainment facilities, now producing over $90 million in EBITDA annually. Additional details regarding the expansion and renovation of the property will be provided as the Company finalizes its plans.
Mr. Boushy added, "We are confident in our ability to demonstrate the strength of our brand and the effectiveness of our operating model in this dynamic market, just as we have done in other markets we have entered."
The acquisition is expected to be slightly accretive to earnings by the second year after closing, following a slightly dilutive effect in year one. Ameristar anticipates that the property's expansion and renovation will be completed during the third year following closing. Based on this timeline, Ameristar expects to more than double the property's EBITDA within three to four years after the acquisition closes.
Ameristar Co-Chairman and Senior Vice President Ray H. Neilsen said, "This is an exciting opportunity to bring the Ameristar brand to the Chicago area, and introduce new guests to Ameristar's high-quality facilities, superior guest service and unparalleled entertainment experience. I am pleased with our ability to demonstrate tangible progress toward achieving our goal to double the size of the Company in the next three to five years. The transaction builds upon the strength of the Ameristar brand, and we expect it will allow us to substantially grow our cash flow and create additional value for our shareholders."
"Ameristar has a proven track record of maximizing the value of our acquired properties, and we are confident this acquisition will mirror our previous successes," said Ameristar Co-Chairman and Executive Vice President Gordon Kanofsky. "As we complete our due diligence over the next few weeks, we will begin developing more detailed expansion and integration plans to ensure Ameristar realizes the full benefit of this acquisition. We believe the resources we will dedicate to the property, combined with the operational enhancements we intend to make, will generate an appropriate return on investment for our shareholders."
Ameristar remains confident in its ability to complete its existing
internal capital projects while it moves forward with its acquisition and the subsequent expansion and renovation of Resorts East Chicago. The Company also expects to retain sufficient financial flexibility to pursue further acquisitions and development projects in line with its growth objectives. "We will remain focused on identifying opportunities with the potential to generate high returns on investment and long-term value for our shareholders," added Mr. Neilsen.
Ameristar has the ability to fully fund this acquisition within its
existing capital structure. Between now and closing, the Company intends to be opportunistic in seeking the most appropriate financing structure.
The transaction is subject to receipt of approvals from various gaming regulatory authorities, antitrust preclearance and the completion of the due diligence period, which ends on April 22. During the due diligence period, Ameristar has the unconditional right to terminate the purchase agreement without penalty. Ameristar expects to complete the transaction in the fourth quarter of 2007.
Lazard is acting as financial advisor to Ameristar, and Gibson, Dunn & Crutcher LLP is acting as legal counsel. Willkie Farr & Gallagher LLP is acting as legal counsel to Resorts International Holdings.
Resorts International Holdings, LLC is an affiliate of Colony Capital
and its partner, Nicholas L. Ribis.
About Ameristar
Ameristar Casinos, Inc. is a leading Las Vegas-based gaming and
entertainment company known for its premier properties characterized by innovative architecture, state-of-the-art casino floors and superior dining, lodging and entertainment offerings. Ameristar's focus on the total entertainment experience and the highest quality guest service has earned it a leading market share position in each of the markets in which it operates. Founded in 1954 in Jackpot, Nevada, Ameristar has been a public company since November 1993. The Company has a portfolio of seven casinos in six markets: Ameristar St. Charles (greater St. Louis); Ameristar Kansas City; Ameristar Council Bluffs (Omaha, Nebraska and southwestern Iowa); Ameristar Vicksburg (Jackson, Mississippi and Monroe, Louisiana); Ameristar Black Hawk (Denver metropolitan area); and Cactus Petes and the Horseshu in Jackpot, Nevada (Idaho and the Pacific Northwest).
Source: Ameristar Casinos, Inc.[/quotes]
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