COLORADO
SPRINGS, Colo., Aug. 25,
2022 /CNW/ -- Century Casinos, Inc. (Nasdaq Capital
Market®: CNTY) ("Century Casinos" or the "Company"), announced that
it entered into a definitive agreement to acquire the operations of
Rocky Gap Casino Resort ("Rocky Gap"), from Lakes Maryland
Development, LLC for approximately $56
million, subject to certain adjustments. The Company will
fund the acquisition using cash from its balance sheet.
Simultaneous with the closing of the transaction, an affiliate
of VICI Properties Inc. (NYSE: VICI) ("VICI") will acquire the real
estate assets for approximately $204
million and the Company will amend its triple net lease
agreement with VICI to add the Rocky Gap property. The amendment to
the lease will include initial annual rent for the Rocky Gap casino
of approximately $15.5 million.
The purchase price for the casino operations represents an
implied 2021 earnings before interest, taxes, depreciation and
amortization ("EBITDA") multiple of 4.9x. The multiple excludes any
potential cost synergies and operational improvements and deducts
annual rent from the VICI lease from EBITDA. The acquisition is
expected to be immediately accretive to the Company's earnings.
"The addition of Rocky Gap is another important milestone in our
pursuit to acquire prime US assets. With this acquisition and our
pending acquisition of the Nugget Casino Resort in Nevada, we will oversee a US portfolio that
reaches from east to west," Erwin Haitzmann and Peter Hoetzinger,
Co-Chief Executive Officers of Century Casinos remarked. "We are
looking forward to working with the Maryland Lottery and Gaming
Control Agency to obtain gaming approvals and with the casino
leadership and team members to effect a smooth transition and great
future for Rocky Gap," they concluded.
Rocky Gap is located in Flintstone,
Maryland in Rocky Gap State Park, which attracts over half a
million visitors annually. The full-service resort sits on
approximately 270 acres and includes an 18-hole golf course
designed by Jack Nicklaus, a 5,000
square-foot events center, several meeting spaces, a spa, and
several outdoor activities. The property consists of over 25,000
square feet of gaming floor, 630 slot machines, 16 table games, 198
hotel rooms and five food and beverage venues. Rocky Gap Casino
Resort had net operating revenue of $78
million and Adjusted EBITDA* of $27
million for the year ended December
31, 2021.
The property has recently invested $10
million in improvements to its hotel, slot machines,
restaurants, and sports lounge. There is potential to expand the
casino and hotel and capture more customers from adjacent markets.
Additionally, Century will have the opportunity to partner with a
sports betting operator in Maryland to bring sports betting to Rocky
Gap.
Upon closing of the Rocky Gap acquisition and the pending
acquisition of Nugget Sparks, LLC ("Nugget") which operates the
Nugget Casino Resort in Sparks,
NV, the Company's North American portfolio will increase to
11 casinos that include 7,140 gaming machines and 158 table games.
On a pro-forma basis after giving effect to the two acquisitions,
the Company expects to generate 94% of its Adjusted EBITDA* from
its North American casinos.
The transaction is expected to close mid-2023, subject to
regulatory and governmental approvals and customary closing
conditions.
Stifel acted as exclusive financial advisor and Faegre Drinker
Biddle & Reath LLP acted as legal counsel to the Company in
connection with the acquisition.
*Adjusted EBITDA is a Non-US GAAP financial measure. See
discussion and reconciliation of Non-US GAAP financial measures in
Supplemental Information below.
Supplemental Information:
The Company defines Adjusted EBITDA as net earnings
(loss) attributable to Century Casinos, Inc. shareholders before
interest expense (income), net, income taxes (benefit),
depreciation and amortization, non-controlling interests net
earnings (loss) and transactions, pre-opening expenses, acquisition
costs, non-cash stock-based compensation charges, asset impairment
costs, (gain) loss on disposition of fixed assets, discontinued
operations, (gain) loss on foreign currency transactions, cost
recovery income and other, gain on business combination and certain
other one-time transactions. Expense related to the Company's
master lease with VICI and the Century Downs Racetrack and Casino
land lease is included in the interest expense (income), net line
item. Intercompany transactions consisting primarily of management
and royalty fees and interest, along with their related tax
effects, are excluded from the presentation of net earnings (loss)
attributable to Century Casinos, Inc. shareholders and Adjusted
EBITDA reported for each segment. Non-cash stock-based compensation
expense is presented under Corporate and Other as the expense is
not allocated to reportable segments when reviewed by the Company's
chief operating decision makers. Not all of the aforementioned
items occur in each reporting period, but have been included in the
definition based on historical activity. These adjustments have no
effect on the consolidated results as reported under US GAAP.
Adjusted EBITDA is not considered a measure of performance
recognized under US GAAP. Management believes that Adjusted EBITDA
is a valuable measure of the relative performance of the Company
and its properties. The gaming industry commonly uses Adjusted
EBITDA as a method of arriving at the economic value of a casino
operation. Management uses Adjusted EBITDA to compare the relative
operating performance of separate operating units by eliminating
the above-mentioned items associated with the varying levels of
capital expenditures for infrastructure required to generate
revenue and the often high cost of acquiring existing operations.
Adjusted EBITDA is used by the Company to gauge operating
performance. The Company's computation of Adjusted EBITDA may be
different from, and therefore may not be comparable to, similar
measures used by other companies within the gaming industry.
The table below provides a reconciliation of Rocky Gap Adjusted
EBITDA to net earnings.
|
|
|
|
|
|
For the year
ended
|
(in millions,
rounded)
|
|
December 31,
2021
|
Net earnings
|
|
$
|
22
|
Interest expense
(income), net
|
|
|
0
|
Depreciation and
amortization
|
|
|
4
|
One time
adjustments
|
|
|
0
|
Loss on
disposal
|
|
|
0
|
Adjusted
EBITDA
|
|
$
|
27
|
|
|
|
|
About Century Casinos,
Inc.:
Century Casinos, Inc. is a casino entertainment company. The
Company owns and operates Century Casino & Hotels in
Cripple Creek and Central City, Colorado, and in Edmonton, Alberta, Canada; the Century Casino
in Cape Girardeau and Caruthersville, Missouri, and in St. Albert, Alberta, Canada; Mountaineer
Casino, Racetrack & Resort in New
Cumberland, West Virginia; and the Century Mile Racetrack
and Casino in Edmonton, Alberta,
Canada. Through its Austrian subsidiary, Century Resorts
Management GmbH, the Company holds a 66.6% ownership interest in
Casinos Poland Ltd., the owner and operator of eight casinos
throughout Poland; a 75% ownership
interest in Century Downs Racetrack and Casino in Calgary, Alberta, Canada. Through its
United States subsidiary, Century
Nevada Acquisition, Inc., the Company owns a 50% membership
interest in Smooth Bourbon, LLC, which owns the land and building
of the Nugget. The Company has an agreement to purchase 100%
membership interests in the Nugget and an agreement to purchase
100% of the equity interest in the Rocky Gap operations. The
Company also has an agreement to operate one ship-based casino. The
Company continues to pursue other projects in various stages of
development.
Century Casinos' common stock trades on The Nasdaq Capital
Market® under the symbol CNTY. For more information about Century
Casinos, visit our website at www.cnty.com.
This release contains certain "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by words such as
"expect," "anticipate," "believe," "intend," "estimate," "plan,"
"target," "goal," or similar expressions, or future or conditional
verbs such as "will," "may," "might," "should," "would," "could,"
or similar variations. These statements are based on the beliefs
and assumptions of the management of Century Casinos based on
information currently available to management. Such forward-looking
statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from future
results expressed or implied by such forward-looking statements.
While there is no assurance that any list of risks and
uncertainties or risk factors is complete, below are certain
factors which could cause actual results to differ materially from
those contained or implied in the forward-looking statements
including: risks related to the acquisition of the Rocky Gap casino
and the integration of the business and assets acquired; the
financial performance of the casino; the possibility that the
transaction does not close when expected or at all because required
regulatory or other approvals are not received or other conditions
to closing are not satisfied on a timely basis or at all; potential
adverse reactions or changes to business or employee relationships,
including those resulting from the completion of the transaction;
the possibility that the anticipated operating results and other
benefits of the transaction are not realized when expected or at
all; local risks including proximate competition, potential
competition, legislative risks, and local relationships; risks
associated with increased leverage from the transaction; and other
risks described in the section entitled "Risk Factors" under
Item 1A in the Company's Annual Report on Form 10-K for the year
ended December 31, 2021, and in
subsequent periodic and current SEC filings the Company may
make. Century Casinos disclaims any obligation to revise
or update any forward-looking statement that may be made from time
to time by it or on its behalf.
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SOURCE Century Casinos, Inc.