The transaction, which is contingent upon the Company securing a gaming license from the Mississippi Gaming Commission and other usual and customary closing conditions, is anticipated to close by the end of the year. If certain closing conditions are not satisfied, the Company could be obligated to pay a $7 million termination fee.
The transaction price represents a multiple of approximately 7.4 times the property’s trailing twelve month EBITDA (earnings before interest, taxes, depreciation and amortization) and 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 to approximately 6.4 times the property’s trailing twelve month EBITDA.
The transaction is expected to be immediately accretive to earnings per share by approximately $0.31.
Based on historical performance, the Company estimates that Riverwalk’s annual impact is expected to be approximately $55 million in revenue (net of promotional allowances), $19 million in EBITDA, and $9.9 million in free cash flow (EBITDA minus maintenance capital, interest and taxes).
CDI Chairman and CEO Robert L. Evans said this acquisition continues to reflect CDI’s commitment to the Company’s growth via diversification strategy.
“We are excited to have another property in the business-friendly state of Mississippi to add to our Harlow’s Casino Resort & Hotel property in Greenville, located 90 miles north of Riverwalk along the Mississippi River,” Evans said. “Riverwalk is an attractive investment for CDI as it is a newer facility with superior design, high quality amenities and is operated by an outstanding team of over 400 employees with whom we look forward to working in the near future. We continue to look for opportunities to invest capital in growth opportunities, and we are hopeful that other jurisdictions, such as Kentucky and Illinois, will offer us a similar opportunity to invest and create jobs in the near future.”
Greg Carlin, CEO of Riverwalk and Rush Street Gaming, said, “We’re grateful to the entire Riverwalk team for its dedication and hard work in making Riverwalk the best casino in Vicksburg.” Carlin went on to note that, “Operations at our remaining casinos in the U.S. and Canada are unaffected by this transaction and we continue to pursue new development opportunities.”
Riverwalk, which is located on approximately 22 acres of land in Vicksburg, Miss., on the Mississippi River less than one mile from Interstate 20, features a 25,000-square-foot single-level gaming floor with 723 Class III slot machines and 18 table games; a five-story, 80-room attached hotel; a 5,600-square-foot multi-functional event center overlooking the river; and two separate dining areas. Of the 19 Mississippi casinos located along the Mississippi River, Riverwalk was one of the two facilities that were not forced to close in 2011 due to record flooding.
The property, which opened in October 2008, is operated by Magnolia Hill, LLC and is owned by High River Gaming, LLC; JB3 Corporation; and Taiman Holdings Corporation. Neil Bluhm is the largest principal in Riverwalk with an approximately 70 percent equity position.
Sidley Austin LLP is acting as legal advisor to the Company in this transaction. Macquarie Capital is acting as financial advisor and Perkins Coie, LLP is acting as legal advisor to the Sellers in this matter.
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.; and a casino resort in Greenville, Miss. CDI also owns the country’s premier advance-deposit wagering company, TwinSpires.com; the totalisator company, United Tote; Bluff Media, an Atlanta-based multimedia poker content, brand and publishing company; and a collection of racing-related telecommunications and data companies. Information about CDI can be found online at www.churchilldownsincorporated.com.