Significantly Diversifies Eldorado’s
Operations Geographically and Financially;Combined Company
will Own and Operate 20 Regional Gaming Facilities in Ten
States
Eldorado Resorts, Inc. (NASDAQ: ERI) (“Eldorado,” “ERI,” or “the
Company”) and Isle of Capri Casinos, Inc. (NASDAQ: ISLE) (“Isle of
Capri” or "Isle") announced today that they have entered into a
definitive merger agreement whereby Eldorado will acquire all of
the outstanding shares of Isle of Capri for $23.00 in cash or 1.638
shares of Eldorado common stock, at the election of each Isle of
Capri shareholder, reflecting total consideration of approximately
$1.7 billion, inclusive of $929 million of long-term debt of Isle
of Capri and its subsidiaries. The exchange ratio for stock
consideration to be issued in the merger is fixed and was
determined based on Eldorado’s 30-trading day volume weighted
average price as of September 18, 2016 of $14.04. Elections are
subject to proration such that the outstanding shares of Isle
common stock will be exchanged for aggregate consideration
comprised of 58% cash and 42% Eldorado common stock. The
transaction is expected to be immediately accretive to Eldorado’s
free cash flow and diluted earnings per share, inclusive of
identified cost synergies of approximately $35 million in the first
year following the completion of the transaction and giving effect
to Isle’s previously announced divestiture of Isle of Capri Casino
Hotel Lake Charles. The transaction consideration represents an
approximate 36% premium over the closing share price of Isle of
Capri on September 16, 2016.
Following the completion of the transaction, Eldorado will
benefit from increased operational and geographic diversity as it
will add thirteen casino–resorts to its portfolio, for a total of
20 properties in ten states. After giving effect to the completion
of the transaction and the sale of Isle of Capri Casino Hotel Lake
Charles, the combined operations of Eldorado and Isle would have
generated approximately $1.8 billion in revenue for the twelve
months ended June 30, 2016. Eldorado’s expanded property portfolio
will feature approximately 20,800 slot machines and VLTs, more than
560 table games and over 6,500 hotel rooms. No single market
accounted for more than 15% of the combined entity’s Adjusted
EBITDA for the twelve month periods ended the last day of the most
recent fiscal quarter for each of Eldorado and Isle.
Gary Carano, Chairman and Chief Executive Officer of Eldorado,
commented, “The acquisition of Isle of Capri represents a
transformational growth opportunity for Eldorado and is a
significant milestone in the successful ongoing execution of our
long-term strategy to opportunistically expand our regional gaming
platform through accretive acquisitions. In the last two years we
have created tremendous value for our shareholders as the scale of
Eldorado Resorts will grow from two wholly-owned properties and a
50% interest in a third property in two markets in 2014 to 20
properties in ten states after completing the transaction.
Financially, the transaction is expected to be accretive to our
operating results upon closing. For the twelve month periods ended
the last day of the most recent fiscal quarter for each of Eldorado
and Isle, the revenues of the combined company were almost double
Eldorado’s revenues on a standalone basis and combined Adjusted
EBITDA was approximately $400 million, inclusive of the cost
synergies we have identified. Strategically, the combination builds
the scale of our gaming operations and further diversifies the
geographic reach of our operations without any overlap with our
existing properties.
“We intend to implement our strategy of focusing on margin
enhancement and customer service and experiences across the
portfolio by marrying best practices from both companies. Led by
our proven gaming, hotel management and food and beverage teams
with a long-term record of operating execution and M&A
integration we believe that Eldorado Resorts will be positioned for
long-term success. Combining the assets, management, personnel,
operations and other resources of these two organizations is
expected to create substantial near- and long-term synergies."
Eric Hausler, Chief Executive Officer of Isle of Capri, added,
“We are pleased to reach this agreement with Eldorado Resorts,
which provides Isle of Capri shareholders with substantial and
immediate value, as well as the opportunity to participate in the
upside potential of the combined company. The premium value our
shareholders will be receiving reflects the culmination of several
years of hard work by many dedicated Isle of Capri employees and
the determination and guidance of our Board of Directors in
creating and driving value. I am thankful for the hard work and
dedication of our talented employees, and I am confident they will
continue to make many valuable contributions as part of a larger
and stronger organization. I look forward to working closely with
the Eldorado team to bring our companies together to realize the
benefits of this compelling combination and ensure a smooth
transition.”
Tom Reeg, President and Chief Financial Officer of Eldorado,
concluded, “This acquisition marks further progress toward our goal
of strategically expanding our property base to realize benefits of
scale, increasing long-term strategic and financial flexibility,
and driving shareholder value. Our experience and success over the
last two years in integrating the MTR assets and Silver Legacy and
Circus Circus operations will serve us well as we add the Isle of
Capri assets to our operating base. With our experienced management
team, operating discipline and return-focused approach to capital
expenditures, we believe the acquisition of Isle of Capri offers a
meaningful opportunity for Eldorado Resorts, our shareholders and
Isle shareholders. Notably, after giving effect to the transaction,
the incurrence of debt to fund the cash portion of the purchase
price, transaction expenses, and the expected first year cost
synergies of $35 million, we expect our net leverage ratio to be
approximately 5.1x at closing. We plan to use the free cash flow
expected to be generated by the combined company to reduce leverage
and pursue future growth opportunities.”
Eldorado has received committed financing for the transaction
totaling $2.1 billion from J.P. Morgan. The completion of the
transaction is not subject to a financing contingency.
The transaction has been unanimously approved by the Boards of
Directors of both Eldorado Resorts, Inc. and Isle of Capri Casinos,
Inc. The transaction is subject to approval of the stockholders of
Eldorado Resorts and Isle of Capri, the approval of applicable
gaming authorities, the expiration of the applicable
Hart-Scott-Rodino waiting period and other customary closing
conditions, and is expected to be consummated in the second quarter
of 2017. Certain stockholders of Eldorado and Isle of Capri who
control approximately 24% and 35% of the outstanding shares of
common stock of Eldorado and Isle of Capri, respectively, have
signed agreements to vote in favor of the transaction. Upon
completion of the transaction, Eldorado and Isle of Capri
shareholders will hold approximately 62% and 38%, respectively, of
the combined company’s outstanding shares. In addition, subject to
mutual agreement by both companies, two members of the Isle of
Capri Board of Directors will be designated as members of the
Eldorado Board of Directors effective immediately following the
closing of the transaction.
J.P. Morgan is acting as exclusive financial advisor and Milbank
Tweed Hadley & McCloy LLP is acting as legal counsel to
Eldorado in connection with the proposed transaction. Credit Suisse
is acting as exclusive financial advisor and Mayer Brown LLP is
acting as legal counsel to Isle of Capri in connection with the
proposed transaction.
Conference Call, Webcast, Investor Presentation
Eldorado Resorts and Isle of Capri will host a joint conference
call today, Monday, September 19 at 8:30 a.m. ET to review the
transaction and host a question and answer session. To access the
conference call, interested parties may dial (888) 461-2011
(domestic callers) or (719) 457-2659 (international callers). The
Conference ID Number is 8991337. Participants can also listen to a
live webcast of the call from Eldorado’s website at
http://www.eldoradoresorts.com/ or Isle of Capri’s website at
http://www.islecorp.com/index.html. During the conference call and
webcast, management will review a presentation summarizing the
proposed transaction which can be accessed at
http://www.eldoradoresorts.com/. A webcast replay will be available
for 90 days following the live event at
http://www.eldoradoresorts.com/. Please call five minutes in
advance to ensure that you are connected. Questions and answers
will be taken only from participants on the conference call. For
the webcast, please allow 15 minutes to register, download and
install any necessary software.
About Eldorado Resorts, Inc.
Eldorado Resorts is a casino entertainment company that owns and
operates seven properties in five states, including the Eldorado
Resort Casino, the Silver Legacy Resort Casino and Circus Circus
Resort Casino in Reno, NV; the Eldorado Resort Casino in
Shreveport, LA; Scioto Downs Racino in Columbus, OH; Mountaineer
Casino Racetrack & Resort in Chester, WV; and Presque Isle
Downs & Casino in Erie, PA. For more information, please visit
www.eldoradoresorts.com.
About Isle of Capri Casinos, Inc.
Isle of Capri Casinos, Inc. is a leading regional gaming and
entertainment company dedicated to providing guests with an
exceptional experience at each of the 14 casino properties that it
owns or operates, primarily under the Isle and Lady Luck brands.
The Company currently operates gaming and entertainment facilities
in Colorado, Florida, Iowa, Louisiana, Mississippi, Missouri, and
Pennsylvania. More information is available at the Company's
website, www.islecorp.com.
Important Information for Investors and Stockholders
The information in this press release is not a substitute for
the prospectus/proxy statement that Eldorado and Isle will file
with the Securities and Exchange Commission (the “SEC”), which will
include a prospectus with respect to shares of Eldorado common
stock to be issued in the merger and a proxy statement of each of
Eldorado and Isle in connection with the merger between Eldorado
and Isle (the “Prospectus/Proxy Statement”). The Prospectus/Proxy
Statement will be sent or given to the stockholders of Eldorado and
Isle when it becomes available and will contain important
information about the merger and related matters, including
detailed risk factors. SECURITY HOLDERS OF ELDORADO AND ISLE ARE
ADVISED TO READ THE PROSPECTUS/PROXY STATEMENT CAREFULLY WHEN IT
BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED MERGER. The Prospectus/Proxy Statement and other
documents that will be filed with the SEC by Eldorado and Isle will
be available without charge at the SEC’s website, www.sec.gov, or
by directing a request when such a filing is made to
(1) Eldorado Resorts, Inc. by mail at 100 West Liberty Street,
Suite 1150, Reno, Nevada 89501, Attention: Investor Relations, by
telephone at (775) 328-0112 or by going to the Investor page on
Eldorado’s corporate website at www.eldoradoresorts.com; or
(2) Isle of Capri Casinos, Inc. by mail at 600 Emerson Road,
Suite 300, Saint Louis, Missouri 63141, Attention: Investor
Relations, by telephone at (314) 813-9200, or by going to the
Investors page on Isle’s corporate website at www.islecorp.com. A
final proxy statement or proxy/prospectus statement will be mailed
to stockholders of Eldorado and Isle as of their respective record
dates.
The information in this press release is neither an offer to
sell nor the solicitation of an offer to sell, subscribe for or buy
any securities, nor shall there be any sale, issuance or transfer
of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of such jurisdiction. This communication
is also not a solicitation of any vote in any jurisdiction pursuant
to the proposed transactions or otherwise. No offer of securities
or solicitation will be made except by means of a prospectus
meeting the requirements of Section 10 of the Securities Act
of 1933, as amended.
Proxy Solicitation
Eldorado and Isle, and certain of their respective directors,
executive officers and other members of management and employees
may be deemed participants in the solicitation of proxies in
connection with the proposed transactions. Information about the
directors and executive officers of Eldorado is set forth in the
proxy statement for Eldorado’s 2016 annual meeting of stockholders
and Eldorado’s 10-K for the year ended December 31, 2015.
Information about the directors and executive officers of Isle is
set forth in the proxy statement for Isle’s 2016 annual meeting of
shareholders and Isle’s Form 10-K for the year ended April 24,
2016. Investors may obtain additional information regarding the
interests of such participants in the proposed transactions by
reading the prospectus/proxy statement for such proposed
transactions when it becomes available.
Non-GAAP Measures
Adjusted EBITDA is a non-GAAP measurement. Eldorado defines
adjusted EBITDA operating income (loss) before depreciation and
amortization, stock based compensation, (gain) loss on the sale or
disposal of property, equity in income of unconsolidated affiliate,
acquisition charges, S-1 expenses, severance expenses and other
regulatory gaming assessments, including the impact of change in
reporting requirements.
Isle defines Adjusted EBITDA as earnings from continuing
operations before interest and other non-operating income
(expense), income taxes, stock-based compensation, preopening
expenses and depreciation and amortization.
Combined Adjusted EBITDA is based on the combination of
Eldorado’s Adjusted EBITDA and Isle’s Adjusted EBITDA for the
relevant periods.
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 the current
expectations of Eldorado and Isle and are subject to uncertainty
and changes in circumstances. These forward-looking statements
include, among others, statements regarding the expected synergies
and benefits of a potential combination of Eldorado and Isle,
including the expected accretive effect of the merger on Eldorado’s
results of operations; the anticipated benefits of geographic
diversity that would result from the merger and the expected
results of Isle’s gaming properties; expectations about future
business plans, prospective performance and opportunities; required
regulatory approvals; the expected timing of the completion of the
transaction; and the anticipated financing 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
Eldorado and Isle; (b) the ability and timing to obtain
required regulatory approvals (including approval from gaming
regulators and expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976) and satisfy
or waive other closing conditions; (c) the ability to obtain
the approval of stockholders of Eldorado and Isle; (d) 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; (e) Eldorado’s ability
to realize the synergies contemplated by a potential transaction;
(f) Eldorado’s ability to promptly and effectively integrate
the business of Eldorado and Isle; (g) uncertainties in the global
economy and credit markets and its potential impact on Eldorado’s
ability to finance the transaction; (h) the outcome of any
legal proceedings that may be instituted in connection with the
transaction; (i) the ability to retain certain key employees
of Isle; (j) the possibility of a material adverse change
affecting Eldorado or Isle; (k) the possibility that the business
of Eldorado or Isle may suffer as a result of the announcement of
the transaction; (l) Eldorado’s ability to obtain financing on
the terms expected, or at all; (m) changes in value of Eldorado’s
common stock between the date of the merger agreement and the
closing of the merger; and (n) the risk factors disclosed in
Eldorado’s most recent Annual Report on Form 10-K, which Eldorado
filed with the SEC on March 15, 2016 and the risk factors disclosed
in Isle’s most recent Annual Report on Form 10-K, which Isle filed
with the SEC on June 21, 2016, and in all reports on Forms 10-K,
10-Q and 8-K filed with the Securities and Exchange Commission by
Eldorado and Isle subsequent to the filing of their respective Form
10-K’s. Forward-looking statements reflect the analysis of
management of Eldorado and Isle as of the date of this release.
Eldorado and Isle 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160919005489/en/
Eldorado Resorts:Eldorado Resorts, Inc.Thomas Reeg,
775-328-0112President and Chief Financial
Officerinvestorrelations@eldoradoresorts.comorJCIRJoseph N.
Jaffoni, Richard Land212-835-8500eri@jcir.comorIsle of
Capri:Isle of Capri Casinos, Inc.Eric Hausler,
314-813-9205Chief Executive OfficerorJill Alexander,
314-813-9368Senior Director of Corporate Communication
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