Churchill Downs Incorporated (CDI or Company) (Nasdaq:CHDN)
announced that it has entered into a definitive purchase agreement
to acquire Oxford Casino (Oxford) in Oxford, Maine, for total
consideration of approximately $160 million, to be paid in cash.
The transaction, which is dependent on the Company
securing a gaming license from the Maine Gaming Control Board, and
on other usual and customary closing conditions, is anticipated to
close in the fourth-quarter of 2013. If certain closing conditions
are not satisfied, the Company could be obligated to pay an $8
million termination fee.
The property opened in June 2012 and completed an expansion of
its gaming floor in early October 2012; thus, only limited actual
financial data is available. Based on the Company's projections and
Oxford's management team's budget, the Company expects that at
closing the transaction price will represent a multiple of
approximately 7 ½ times the property's then-trailing twelve month
EBITDA (earnings before interest, taxes, depreciation and
amortization.) The transaction is expected to be immediately
accretive to earnings per share and provide annual free cash flow
of approximately $12.5 million.
The transaction 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.
CDI Chairman and CEO Robert L. Evans explained why
Oxford Casino was an appealing investment for the Company.
"The acquisition of Oxford continues our focus on
investing capital in gaming-friendly states, in newer properties,
in what we believe are competitively defensible markets, and at
valuations that we believe will result in significant future free
cash flow generation at rates of return attractive to our
shareholders," Evans said. "The Oxford team of over 400 employees
has done an exceptional job and we look forward to welcoming them
into the Churchill Downs family."
Bob Bahre, a founder of Black Bear Realty Co., LLC,
said his primary reason for getting involved in the project was to
bring jobs to the region.
"We are extremely proud of the property and, more
importantly, of the incredible team that works at Oxford
Casino. Although we developed the property, operating casinos
is not our core business, and we thought that the time was right to
look for a major gaming company that could take this property to
the next level. We are confident that we have found such a
group in Churchill Downs, and we look forward to welcoming them
into the community."
The property is owned by Black Bear Realty Co.,
LLC. Sidley Austin LLP is acting as legal advisor to the Company in
this transaction. Wells Fargo Securities LLC is acting as
financial advisor and Greenberg Traurig, LLP is acting as legal
advisor to the Black Bear Realty Co., LLC in this matter.
About Oxford Casino
Oxford, which opened in June 2012 and underwent an
expansion completed in October 2012, is located on 100-acres about
40 minutes northwest of Portland in the heart of southern Maine.
The property includes a 25,000-square-foot single-level gaming
floor with 790 Class III slot machines and 22 table games. It also
hosts a 140-seat casual restaurant - Oxford Grill, a 12-seat casino
bar and a grab-and-go. Further information can be found at
www.oxfordcasino.com.
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.; a
casino resort in Greenville, Miss.; as well as a casino hotel in
Vicksburg, Miss.; CDI also owns the country's premier online
wagering company, TwinSpires.com; the totalisator company, United
Tote; Luckity.com, offering fun games online for a chance to win
cash prizes; Bluff Media, an Atlanta-based multimedia poker
company; and a collection of racing-related telecommunications and
data companies. In addition, CDI's 50 percent owned joint venture,
Miami Valley Gaming and Racing LLC, is currently constructing a
video lottery terminal and harness racing facility in southwest
Ohio. Additional 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 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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