MTR Gaming Group, Inc. (NasdaqGS:MNTG) and Eldorado Resorts, LLC
today announced that they have entered into a definitive agreement
under which MTR Gaming Group will combine with the parent company
of Eldorado Resorts, LLC in a stock merger. As part of the
transaction, a cash election option will be offered at $5.15 per
share for up to 5.8 million shares to MTR Gaming’s current
stockholders. MTR Gaming’s remaining common shares will be
exchanged for shares in the combined new company. The combined new
company will remain publicly traded and be named Eldorado Resorts,
Inc.
Under the terms of the agreement, the transaction value of
Eldorado Resorts, LLC will be determined by LTM EBITDA at closing
multiplied by 6.81x, less net debt and other adjustments. Based on
Eldorado’s current LTM EBITDA as of June 30, 2013 (including its
interest in Silver Legacy, a 50 / 50 joint venture with MGM Resorts
International), Eldorado’s owners would be issued 35.6 million
shares, or approximately 55% of the total shares, in the combined
new company valued at $5.15 per share.
Gary Carano will be named the Chief Executive Officer of the
combined company. The anticipated closing of the transaction is in
mid-2014 and is subject to the customary regulatory and closing
conditions being satisfied, including approval by MTR Gaming’s
stockholders.
“We are excited to announce this transformative transaction,
which creates a new gaming platform with a diversified portfolio
across the country,” said Mr. Carano. “Our strong balance sheet
will allow us to take advantage of future growth opportunities as
the gaming industry continues to consolidate. In addition, we are
thrilled to partner with the team at MTR Gaming, who have done a
tremendous job in developing and operating the MTR portfolio. We
believe that the MTR Gaming management team will be a significant
part of our success going forward.”
“This transaction provides MTR Gaming Group a great opportunity
to offer our stockholders a choice to continue to be a part of our
future success or to receive a significant cash premium to the
current stock price,” said Joseph L. Billhimer, President and Chief
Operating Officer of MTR Gaming Group, Inc. “Further, as a more
diversified and stronger company, we believe the new Eldorado
Resorts will provide greater opportunities with a broader platform
for all of MTR Gaming’s existing stakeholders, including our team
members, vendors, equity and bondholders and above all, our valued
customer.”
Together, the new company will operate six properties across
five jurisdictions with 9,968 slot machines and video lottery
terminals, 283 table games and 3,282 hotel rooms. The combination
will create a regional gaming operator with LTM pro forma annual
net revenues and EBITDA of $832.6 million and $158.6 million,
respectively, as of June 30, 2013. Based on the transaction value
of $5.15 per share, the combined new company will have a pro forma
enterprise value of approximately $1.0 billion.
Macquarie Capital served as MTR Gaming’s exclusive financial
advisor and Stevens & Lee, P.C. served as legal counsel to MTR
Gaming. Milbank, Tweed, Hadley & McCloy LLP served as legal
counsel to Eldorado Resorts.
Conference Call
MTR Gaming Group and Eldorado Resorts management will conduct a
conference call to discuss the proposed transaction on Tuesday,
September 10, at 10:00 a.m. EDT. Interested parties may participate
in the call by dialing (888) 505-4375. Please call in 10 minutes
before the call is scheduled to begin and ask for the MTR Gaming
call (conference ID # 3233668).
The conference call will be webcast live via the Investor
Relations section of the Company’s website at www.mtrgaming.com. To
listen to the live webcast please go to the website at least 15
minutes early to register, download and install any necessary audio
software. If you are unable to listen live, the conference call
will be archived on the Investor Relations section of the Company’s
website.
A replay of the call will be available two hours following the
end of the call through midnight EDT on Tuesday, September 17, 2013
at www.mtrgaming.com and by telephone at (877) 870-5176; passcode
3233668.
About MTR Gaming Group
MTR Gaming Group, Inc. is a hospitality and gaming company that
through subsidiaries owns and operates Mountaineer Casino,
Racetrack & Resort in Chester, West Virginia; Presque Isle
Downs & Casino in Erie, Pennsylvania; and Scioto Downs in
Columbus, Ohio. For more information, please visit
www.mtrgaming.com.
About Eldorado Resorts
Eldorado Resorts is an owner and operator of gaming properties
in Nevada and Louisiana. Eldorado Resorts’ properties include
Eldorado Reno, Eldorado Shreveport and Silver Legacy (a 50 / 50
joint venture with MGM Resorts International). For more
information, please visit www.eldoradoreno.com,
www.eldoradoshreveport.com and www.silverlegacyreno.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on current
expectations of MTR Gaming Group (“MTR”) and Eldorado Resorts
(“Eldorado”) and are subject to uncertainty and changes in
circumstances. These forward-looking statements include, among
others, statements regarding the expected benefits of a potential
combination of MTR and Eldorado, including the expected effect of
the merger on MTR’s and Eldorado’s financial results and profile
(e.g., free cash flow, earnings per share and Adjusted EBITDA); the
anticipated benefits of geographic diversity that would result from
the merger and the expected results of MTR’s and Eldorado’s gaming
properties; expectations about future business plans, prospective
performance and opportunities; required regulatory approvals and
the expected timing of the completion of the transaction. These
forward-looking statements may be identified by the use of words
such as “expect,” “anticipate,” “believe,” “estimate,” “potential,”
“should”, “will” or similar words intended to identify information
that is not historical in nature. The inclusion of such statements
should not be regarded as a representation that such plans,
estimates or expectations will be achieved. There is no assurance
that the potential transaction will be consummated, and there are a
number of risks and uncertainties that could cause actual results
to differ materially from the forward-looking statements made
herein. These risks and uncertainties include (a) the timing to
consummate a potential transaction between MTR and Eldorado; (b)
the ability and timing to obtain required regulatory approvals
(including approval from gaming regulators) and satisfy or waive
other closing conditions; (c) the possibility that the merger does
not close when expected or at all; or that the companies may be
required to modify aspects of the merger to achieve regulatory
approval; (d) the ability of MTR and Eldorado to promptly and
effectively integrate their respective businesses; (e) the
requirement to satisfy closing conditions to the merger as set
forth in the merger agreement, including the termination or
expiration of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976; (f) the outcome of any legal
proceedings that may be instituted in connection with the
transaction; (g) the ability to retain certain key employees of MTR
or Eldorado; (h) that there may be a material adverse change
affecting MTR or Eldorado, or the respective businesses of MTR or
Eldorado may suffer as a result of uncertainty surrounding the
transaction; and (i) the risk factors disclosed in MTR’s filings
with the Securities and Exchange Commission (the “SEC”), including
its Annual Report on Form 10-K, which MTR filed on March 15,
2013. Forward-looking statements reflect MTR’s and Eldorado’s
management’s analysis as of the date of this release, even if
subsequently made available MTR or Eldorado on their respective
websites or otherwise. MTR and Eldorado do not undertake to revise
these statements to reflect subsequent developments, except as
required under the federal securities laws. Readers are cautioned
not to place undue reliance on any of these forward-looking
statements.
Annualized, pro forma, projected and estimated numbers are used
for illustrative purpose only, are not forecasts and may not
reflect actual results.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
This communication is not a solicitation of a proxy from any
stockholder of MTR or Eldorado. In connection with the agreement
and plan of merger among MTR, Eldorado and certain affiliates (the
“Merger Agreement"), MTR, Eldorado and the new holding company
("Newco") intend to file relevant materials with the SEC, including
a Registration Statement on Form S-4 filed by Newco, that will
contain a proxy statement/prospectus. INVESTORS AND SECURITY
HOLDERS ARE URGED TO READ THESE MATERIALS AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT MTR, ELDORADO, NEWCO
AND THE PROPOSED TRANSACTION. The Form S-4, including the proxy
statement/prospectus, and other relevant materials (when they
become available), and any other documents filed by Eldorado, Newco
or MTR with the SEC, may be obtained free of charge at the SEC's
web site at www.sec.gov. In addition, investors and security
holders may obtain free copies of the documents filed with the SEC
by directing a written request to "Investor Relations," MTR Gaming
Group, Inc., Route 2, P.O. Box 356, Chester, West
Virginia 26034, or by accessing MTR's website at www.mtrgaming.com
under the heading “About” and then "Investor Relations" and then
under "SEC Filings."
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
PARTICIPANTS IN THE SOLICITATION
Eldorado, MTR and Newco and their respective executive officers
and directors may be deemed to be participants in the solicitation
of proxies from the security holders of MTR in connection with the
proposed transaction. Information about MTR's directors and
executive officers is available in MTR's definitive proxy
statement, dated April 30, 2013, for its 2013 annual meeting of
stockholders. Other information regarding the participants and
description of their direct and indirect interests, by security
holdings or otherwise, will be contained in the Form S-4 and the
proxy statement/prospectus that Newco will file with the SEC, when
it becomes available.
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