Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE) and
Twin River Worldwide Holdings, Inc. announced today that they have
entered into a definitive merger agreement. The proposed
transaction will transform Twin River into a publicly traded
company with strategically placed gaming and entertainment holdings
throughout the United States.
The merger contemplates that Dover Downs stockholders will
exchange their Dover Downs stock for Twin River common shares
representing 7.225% of the equity in the combined company at
closing. Common Stock and Class A Common Stock of Dover Downs will
be treated equally in the merger. The transaction is intended to
qualify as a tax-free reorganization (except for cash paid in lieu
of fractional shares).
Twin River is privately held and there is currently no public
market for its shares. As a condition to closing, Twin River will
register its shares with the Securities and Exchange Commission
(the “SEC”) and list the shares on the NYSE or NASDAQ. For the
fiscal year ended December 31, 2017, Twin River’s results were:
Net revenue $428.8 million Income before provision for
income taxes $102.2 million Net income $ 63.5 million Adjusted
EBITDA $167.2 million EBITDA $160.7 million Basic EPS $6.63/share
Diluted EPS $6.59/share
Adjusted EBITDA and EBITDA are non-GAAP financial measures. See
“Non-GAAP Financial Measures.” As of March 31, 2018, Twin River’s
GAAP debt was $381.4 million, unrestricted cash and cash
equivalents were $64.8 million and primary shares outstanding were
9.582 million.
The number of Twin River shares to be issued will be calculated
based on each company’s fully diluted share count at closing. Based
on each company’s share count as of the date hereof, each share of
Dover Downs stock would be exchanged for 0.0225 shares of Twin
River stock. Twin River contemplates effecting a stock split prior
to closing intended to bring its stock price to a marketable
trading range, which would result in a corresponding adjustment to
the exchange ratio. Twin River also currently intends to initiate a
tender offer or other form of return of capital transaction after
the closing. The amount and terms will be determined at that time
and be based upon prevailing market conditions, Twin River’s
financial condition and prospects and other factors.
Dover Downs’ President and CEO, Denis McGlynn stated, “Becoming
part of Twin River is transformational for us. We have been
impressed with the depth and talent of the Twin River organization
and their operational capabilities. We believe this transaction
will help us grow our business, invest in our people and our
facilities and compete more effectively given changes in gaming on
the horizon. We expect to see many positive benefits for the State,
the Delaware Lottery and our employees and stockholders.”
Jeffrey W. Rollins, a director and member of the Audit Committee
of Dover Downs is expected to join the Twin River Board of
Directors post-closing, pending regulatory approval.
A committee of the Board of Directors of Dover Downs comprised
of non-executive, independent directors unanimously determined that
the transaction is fair to, and in the best interests of, Dover
Downs and its stockholders. The Dover Downs Board of Directors has
also unanimously approved the transaction, and has recommended that
Dover Downs’ stockholders approve the merger. Houlihan Lokey
Capital, Inc. provided a fairness opinion to the Dover Downs Board
of Directors in connection with the transaction. All directors and
executive officers of Dover Downs executed a Voting Agreement by
which they agree to vote in favor of the merger, subject to the
terms and conditions set forth in the agreement. The approval of a
majority of Dover Downs’ unaffiliated stockholders is a condition
to closing.
Twin River Executive Chairman John E. Taylor, Jr. said, “We’re
excited about the many benefits we believe we will realize from the
combination. Dover Downs and its team are experienced in not only
brick and mortar casino operations, but in sports betting, which we
think will be helpful as we introduce that amenity at our
properties, and in the online gaming sector which continues to
evolve nationwide. Equally important, we see real opportunities to
grow the Dover Downs business through investment in its people and
facilities, similar to what we have achieved with our other assets
over the past several years.”
Taylor continued, “We’ve been focused on growing the overall
business for some time now as a means to create greater shareholder
value, expand our geographic footprint to achieve financial
economies and strengthen our financial position. This merger should
well position us to achieve all three objectives in a context in
which existing shareholders of Twin River who desire it could
obtain liquidity.”
He concluded, “We’re grateful for the strong partnership we
enjoy with the State of Rhode Island at our flagship property, and
we look forward to working equally effectively with the State of
Delaware in maximizing the potential of Dover Downs.”
The merger would provide a physical presence for Twin River in
the Mid-Atlantic region, a new geographic market. Twin River
already operates assets in the South (Biloxi, Mississippi), West
(Aurora, Colorado) and Northeast (Lincoln and Tiverton, Rhode
Island (opening shortly)) regions.
The consummation of the merger is also subject to regulatory
approvals and other customary closing conditions.
Dover Downs was advised by Citizens Capital Markets as financial
advisor and Drinker Biddle & Reath LLP as legal counsel. Twin
River’s financial advisors were Moelis & Company LLC and Stifel
and its counsel was Jones Day.
Conference Call
Dover Downs and Twin River will host a joint conference call on
Monday, July 23, 2018 at 8:30 a.m. Eastern time to discuss the
proposed transaction. The toll-free number to call for this
teleconference is (888) 942-8617 (international callers should use
(312) 470-7398) / participant passcode 2760440. An investor
presentation will be available before such call as an exhibit to a
Form 8-K that Dover Downs will file with the SEC.
Additional Information and Where to Find It
In connection with the proposed transaction, Dover Downs and
Twin River will file with the SEC a registration statement on Form
S-4 that will include a combined proxy statement/prospectus. This
communication is not a substitute for any proxy statement,
registration statement, prospectus or other documents Dover Downs
and/or Twin River may file with the SEC in connection with the
proposed transaction. INVESTORS ARE URGED TO READ CAREFULLY AND IN
THEIR ENTIRETY THESE DOCUMENTS WHEN THEY BECOME AVAILABLE, ANY
AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS AND OTHER DOCUMENTS
FILED BY DOVER DOWNS OR TWIN RIVER WITH THE SEC IN CONNECTION WITH
THE PROPOSED TRANSACTION BECAUSE THESE DOCUMENTS WILL CONTAIN
IMPORTANT INFORMATION. Investors will be able to obtain free copies
of these materials and other documents filed with the SEC by Dover
Downs and/or Twin River through the website maintained by the SEC
at www.sec.gov. Investors will also be able to obtain free copies
of the documents filed by Dover Downs and/or Twin River with the
SEC from the respective companies by directing a written request to
Dover Downs at Dover Downs Gaming & Entertainment, Inc., 1131
North DuPont Highway, Dover, Delaware 19901 or by calling (302)
857-3292, or contact Twin River at Twin River Worldwide Holdings,
Inc., 100 Twin River Road, Lincoln, RI 02865 or by calling (401)
374-2553.
No Offer or Solicitation
This communication is for informational purposes only and not
intended to and does not constitute an offer to subscribe for, buy
or sell, the solicitation of an offer to subscribe for, buy or sell
or an invitation to subscribe for, buy or sell any securities or
the solicitation of any vote or approval in any jurisdiction
pursuant to, or in connection with, the proposed transaction or
otherwise, nor will there be any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable law.
No offer of securities will be made except by means of a prospectus
meeting the requirements of Section 10 of the Securities Act of
1933, as amended (the “Securities Act”), and otherwise in
accordance with applicable law.
Participants in the Solicitation
This communication is not a solicitation of a proxy from any
investor. Dover Downs, Twin River, their respective directors,
executive officers and other members of their management and
employees may be deemed to be participants in the solicitation of
proxies from stockholders of Dover Downs in connection with the
proposed transaction. Information regarding the persons who may,
under the rules of the SEC, be deemed participants in the
solicitation of proxies in connection with the proposed
transaction, including a description of their direct or indirect
interests, by security holdings or otherwise, will be set forth in
the relevant materials when filed with the SEC. Information
regarding the directors and executive officers of Dover Downs is
contained in Dover Downs’ proxy statement for its 2018 annual
meeting of stockholders, filed with the SEC on March 29, 2018, its
annual report on Form 10-K for the year ended December 31, 2017,
which was filed with the SEC on March 1, 2018, its quarterly report
on Form 10-Q for the quarter ended March 31, 2018, which was filed
with the SEC on May 11, 2018 and certain of its current reports
filed on Form 8-K. These documents can be obtained free of charge
from the sources indicated above.
About Dover Downs
Owned by Dover Downs Gaming & Entertainment, Inc. (NYSE:
DDE), Dover Downs Hotel & Casino® is a premier gaming and
entertainment resort destination in the Mid-Atlantic region. Gaming
operations consist of approximately 2,200 slots, a full complement
of table games, including poker, and a newly expanded race and
sports book taking single game wagers on professional and college
sports. The AAA-rated Four Diamond hotel is Delaware’s largest with
500 luxurious rooms/suites and amenities including a full-service
spa/salon, concert hall and 41,500 sq. ft. of multi-use event
space. Live, world-class harness racing is featured November
through April, and horse racing is simulcast year-round. Additional
property amenities include multiple restaurants from fine dining to
casual fare, bars/lounges and retail shops. For more information,
please visit www.doverdowns.com.
About Twin River Worldwide Holdings, Inc.
Twin River owns and manages two casinos in Rhode Island, one in
Biloxi, Mississippi as well as a Colorado horse racetrack with OTB
licenses. Twin River’s flagship casino, Twin River Casino, is
located in Lincoln, Rhode Island and offers 162,000 square feet of
gaming space on two floors with 4,220 VLTs and 119 table games,
including a poker room. It shortly will open a 136-room amenity
hotel. Simulcast is offered, and sports betting is scheduled to
debut in Q4 2018. Twin River also owns and manages Newport Grand
Casino in Newport, Rhode Island, which will close in late August
when Tiverton Casino Hotel opens on September 1, 2018. The new
casino will feature 1,000 VLTs, 32 table games and an 83-room
hotel. In Mississippi, Twin River owns and operates the Hard Rock
Hotel & Casino in Biloxi which features 1,200 VLTs, 52 table
games and a 479-room hotel. Arapahoe Park in Aurora, Colorado
offers live horse racing, a racebook and owns 13 OTB licenses.
For more information, visit
www.twinrivermanagementgroup.com.
Caution Concerning Forward-Looking Statements
This communication contains “forward-looking” statements as that
term is defined in Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934, as amended by the
Private Securities Litigation Reform Act of 1995, including
statements regarding the proposed transaction between Dover Downs
and Twin River and other corporate actions. All statements, other
than historical facts, including statements regarding the expected
timing and structure of the proposed transaction, the ability of
the parties to complete the proposed transaction considering the
various closing conditions, the expected benefits of the proposed
transaction, including future financial and operating results, the
tax consequences of the proposed transaction and the combined
company’s plans, objectives, expectations and intentions, legal,
economic and regulatory conditions and any assumptions underlying
any of the foregoing, are forward-looking statements.
Forward-looking statements concern future circumstances and
results and other statements that are not historical facts and are
sometimes identified by the words “may,” “will,” “should,”
“potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,”
“estimate,” “overestimate,” “underestimate,” “believe,” “could,”
“project,” “predict,” “continue,” “target” or other similar words
or expressions. Forward-looking statements are based upon current
plans, estimates and expectations that are subject to risks,
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those indicated
or anticipated by such forward-looking statements. The inclusion of
such statements should not be regarded as a representation that
such plans, estimates or expectations will be achieved. Important
factors that could cause actual results to differ materially from
such plans, estimates or expectations include, among others, (1)
that one or more closing conditions to the transaction, including
certain regulatory approvals, may not be satisfied or waived, on a
timely basis or otherwise, including that a governmental entity may
prohibit, delay or refuse to grant approval for the consummation of
the proposed transaction, may require conditions, limitations or
restrictions in connection with such approvals or that the required
approvals by the stockholders of Dover Downs may not be obtained;
(2) the risk that the proposed transaction may not be completed on
the terms or in the time frame expected by Dover Downs or Twin
River, or at all; (3) unexpected costs, charges or expenses
resulting from the proposed transaction; (4) uncertainty of the
expected financial performance of the combined company following
completion of the proposed transaction; (5) failure to realize the
anticipated benefits of the proposed transaction, including as a
result of any delay in completing the proposed transaction or
integrating the businesses of Dover Downs and Twin River; (6) the
ability of the combined company to implement its business strategy;
(7) difficulties and delays in achieving revenue and cost synergies
of the combined company; (8) the consummation, timing and terms of
any stock split, tender offer or similar transaction; (9) the
inability to retain and hire key personnel; (10) the occurrence of
any event that could give rise to the termination of the proposed
transaction; (11) the risk that stockholder litigation in
connection with the proposed transaction or other settlements or
investigations may affect the timing or occurrence of the proposed
transaction or result in significant costs of defense,
indemnification and/or liability; (12) evolving legal, regulatory
and tax regimes; (13) changes in general economic and/or industry
specific conditions; (14) actions by third parties, including
government agencies; and (15) other risk factors as detailed from
time to time in Dover Downs’ reports filed with the SEC, including
Dover Downs’ annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and other documents filed with
the SEC and those that will be included in the combined proxy
statement/prospectus to be filed with the SEC in connection with
the proposed transaction. The foregoing list of important factors
is not exclusive.
Any forward-looking statements speak only as of the date of this
communication. Neither Dover Downs nor Twin River undertakes any
obligation to update any forward-looking statements, whether as a
result of new information or development, future events or
otherwise, except as required by law. Readers are cautioned not to
place undue reliance on any of these forward-looking
statements.
Non-GAAP Financial Measures
Twin River’s management uses the following non-GAAP financial
measures in conjunction with its GAAP financial measures: EBITDA
and adjusted EBITDA.
The table below reconciles net income to EBITDA and adjusted
EBITDA. EBITDA is defined as net income before net interest
expense, income taxes and depreciation and amortization. Adjusted
EBITDA is defined as EBITDA before management fees, stock based
compensation, franchise taxes and non-recurring expenses such as
non-recurring litigation expenses, legal and financial expenses for
strategic reviews, storm-related repair expenses, acquisition,
expansion and pre-opening expenses and credit agreement
amendment-related expenses.
Twin River believes that EBITDA and adjusted EBITDA are useful
measures to enhance an overall understanding of Twin River’s past
financial performance. Further, EBITDA and adjusted EBITDA are
measures of operating performance used by management to evaluate
operations and operating performance and are widely used in the
gaming industry.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
presented in compliance with GAAP. Non-GAAP financial measures
reported by us may not be comparable to similarly titled amounts
reported by other companies.
Reconciliation of Net Income to EBITDA
and Adjusted EBITDA (in thousands)
Year Ended
December 31, 2017
Net income $ 63,499 Add: Interest expense, net of
interest income 23,058 Add: Income taxes 38,726 Add: Depreciation
and amortization 35,408
EBITDA 160,691 Add: Stock
based compensation 2,986 Add: Non-recurring litigation expenses
1,722 Add: Legal & financial expenses for strategic review 822
Add: Franchise tax expense 455 Add: Storm-related repair expenses
250 Add: Acquisition, expansion and pre-opening expenses 154 Add:
Credit Agreement amendment expenses 106
Adjusted EBITDA $
167,186
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version on businesswire.com: https://www.businesswire.com/news/home/20180722005037/en/
Dover Downs:Timothy R. Horne,
302-857-3292Sr. Vice President – FinanceorTwin River:Patti Doyle, 401-374-2553
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