LAS VEGAS--(BUSINESS WIRE)--Golden Entertainment Inc. (NASDAQ:GDEN) (“Golden” or the “Company”), announced today that it completed its previously announced acquisition of American Casino & Entertainment Properties LLC (“American”), for $850 million from Whitehall Street Real Estate Partners 2007 in a cash and stock transaction.
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The acquisition of American Casino & Entertainment Properties LLC brings to Golden Entertainment three properties in Las Vegas including the Stratosphere Casino, Hotel & Tower, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder, as well as the Aquarius Casino Resort in Laughlin. These properties expand and strengthen Golden’s presence in Nevada and the Las Vegas Locals market, while providing the Company with an iconic Las Vegas destination property. Golden now operates 16,000 slot machines, 114 table games and 5,162 hotel rooms across eight casino properties and almost 1,000 distributed gaming locations including the largest branded tavern portfolio in Nevada.
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The purchase consideration consisted of $781 million cash and approximately four million shares of Golden Entertainment common stock. Golden financed the cash portion of the transaction and refinanced its existing credit facilities with a new $800 million 1st Lien Term Loan and a $200 million 2nd Lien Term Loan, as well as obtained a new $100 million senior secured revolving credit facility to support the Company’s future organic and strategic growth initiatives.
Blake L. Sartini, Chairman and Chief Executive Officer of Golden Entertainment, commented, “This acquisition of four leading Southern Nevada properties significantly increases our operational scale and perfectly complements our existing operations. Our new properties and existing businesses are well positioned to grow as they benefit from Nevada’s continued economic strength, particularly in the Las Vegas market. In addition, we have the ability to develop approximately 15 acres of excess real estate surrounding the Stratosphere, which we believe has enormous long-term potential. We look forward to quickly integrating the American operations and welcoming their guests and team members to the Golden family.”
Charles Protell, Chief Financial Officer of Golden, added, “The addition of the American properties to our portfolio firmly establishes Golden as a leading Nevada-focused regional gaming company with expected 2017 pro forma net revenues and adjusted EBITDA of $847 million and $180 million, respectively, which includes $18 million of estimated run-rate synergies. We believe that our expanded asset base, strong operating discipline and ability to quickly realize synergies will result in increased free cash flow, allowing us to reduce leverage as well as reinvest in our existing businesses and new growth opportunities.”
About Golden Entertainment, Inc.
Golden Entertainment, Inc. owns and operates gaming properties across two divisions – resort and casino operations and distributed gaming. The Company operates approximately 16,000 gaming devices, 114 table games, 5,162 hotel rooms, and provides jobs for more than 7,200 team members. Golden Entertainment owns eight casino resorts – seven in Southern Nevada and one in Maryland. Through its distributed gaming business in Nevada and Montana, Golden Entertainment operates video gaming devices at nearly 1,000 locations and owns nearly 60 traditional taverns in Nevada. The Company is licensed in Illinois to operate video gaming terminals. Golden Entertainment is focused on maximizing the value of its portfolio by leveraging its scale, leadership position and proven management capabilities across its two divisions. For more information, visit www.goldenent.com.
Non-GAAP Measures
Adjusted EBITDA is a non-GAAP financial measure. The Company defines “Adjusted EBITDA” as earnings before interest and other non-operating income (expense), income taxes, depreciation and amortization, preopening expenses, acquisition and merger expenses, class action litigation expense, share-based compensation expenses, executive severance and sign-on bonuses, impairments and other gains and losses. This information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. In addition, other companies in the gaming industry may calculate Adjusted EBITDA differently than the Company does.
Forward-Looking Statements
This press release contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. Forward-looking statements can generally be identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “potential,” “seek,” “should,” “think,” “will,” “would” and similar expressions, or they may use future dates. Forward-looking statements in this press release include, without limitation, statements regarding: the benefits of the transaction; estimated future financial and operating results, including the pro forma combined companies’ 2017 net revenues, 2017 adjusted EBITDA and estimated run-rate synergies, and increases in free cash flow; the Company’s ability to quickly realize synergies from the transaction; and the Company’s plans, objectives, expectations and intentions. It is important to note that the Company’s goals and expectations are not predictions of actual performance. These forward-looking statements are subject to assumptions, risks and uncertainties that may change at any time, and readers are therefore cautioned that actual results could differ materially from those expressed in any forward-looking statements. Factors that could cause actual results to differ include, among other things: the effects of disruption caused by the transaction making it more difficult for the Company to execute its operating plan effectively or to maintain relationships with employees, vendors and other business partners; delays in realizing or failure to realize the anticipated cost savings, synergies and other benefits of the transaction; the Company’s ability to successfully integrate American’s businesses, and other acquired businesses; changes in national, regional and local economic, political and market conditions; legislative and regulatory matters (including the cost of compliance or failure to comply with applicable laws and regulations); increases in gaming taxes and fees in the jurisdictions in which the Company operates; litigation; increased competition; the Company’s ability to renew its distributed gaming contracts; reliance on key personnel (including our Chief Executive Officer, Chief Operating Officer and Chief Strategy and Financial Officer); the level of the Company’s indebtedness and the Company’s ability to comply with covenants in its debt facilities; terrorist incidents; natural disasters; severe weather conditions; the effects of environmental and structural building conditions; the effects of disruptions to the Company’s information technology and other systems and infrastructure; factors affecting the gaming, entertainment and hospitality industries generally; and other risks and uncertainties discussed in the Company’s filings with the SEC, including the “Risk Factors” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2017. The Company undertakes no obligation to update any forward-looking statements as a result of new information, future developments or otherwise. All forward-looking statements in this press release are qualified in their entirety by this cautionary statement.
| Public | |
| Industry | Gaming |
|---|---|
| Successor | Golden Entertainment |
| Founded | December 29, 2003; 16 years ago |
| Defunct | October 2, 2017; 2 years ago |
| Headquarters | , United States |
| 4 | |
Area served | Global |
| Products | Casinos, Resorts |
American Casino & Entertainment Properties (ACEP) owned and operated 4 casinos. It was purchased by Golden Entertainment in October 2017 for $850 million.[1] ACEP was a casino holding company headquartered at the Stratosphere Las Vegas.[2][3] ACEP was a wholly owned subsidiary of American Real Estate Partners before it was sold to Whitehall Street Real Estate Funds, an investment arm of Goldman Sachs, in February 2008.[4][5] The company owned the following 4 casinos: Aquarius Casino Resort, Arizona Charlie's Decatur, Arizona Charlie's Boulder and Stratosphere Las Vegas. Golden Entertainment acquired ACEP from Whitehall.
History[edit]
Shortly after opening, the Stratosphere Las Vegas on April 30, 1996, the Stratosphere Corporation was forced to file for bankruptcy. After acquiring a majority of the bonds, ACEP gained control of the casino. Carl Icahn acquired the four properties for $300 million.[6]
On November 29, 2005, Harrah's Entertainment announced plans to sell the Flamingo Laughlin casino to ACEP. The sale closed on May 19, 2006, and the Flamingo Laughlin was renamed the Aquarius Casino Resort in October 2006.[7]
On April 23, 2007, it was announced that ACEP was being sold for $1.3 billion to Whitehall Street Real Estate Funds, an investment fund managed by Goldman Sachs. The sale closed on February 21, 2008. Although revenue for 2008 had only slipped by 4.47% from 2007, the interest costs of acquisition had turned ACEP into a money losing operation. ACEP registered its first positive net income since 2007 of $7.0 million in 2014 and $12.1 million in 2015.[8][9]
In 2007, Whitehall Street Real Estate Funds, who owned 40% of the Las Vegas Hilton and was a passive investor in other casino properties, made an offer of $1.3 billion for the four properties. The appraisal assigned a value of $718 million to the land under the four properties. The buildings were worth $366 million. The land valuation seemed to be almost entirely based on the undeveloped 17 acres (69,000 m2) of land near the Stratosphere.
On February 21, 2008, the ownership of ACEP changed hands from the previous owner, Carl Icahn, to Whitehall Street Real Estate Funds. The new owners retired the $255 million senior notes held by the former owner and replaced them with $1.1 billion in new notes held by Goldman Sachs Term Loans. The interest on these loans far exceeded the net income of the company in 2007. The income of the company had to grow to cover this new financing.
In 2008, ACEP completed $54.0 million in renovations at the Aquarius Casino Resort.[10]
By the 4th quarter of 2008, the company's revenue began plummeting precipitously. The cost of the acquisition was so considerable that the company was operating at a net loss. In March 2009, the company announced that it would begin layoffs.[11]
In May 2009, Whitehall was in discussions to restructure the debt with its lender, Goldman Sachs, due to concerns that the company could default if gaming and visitor numbers continued to decline. Whitehall, which is an affiliate of Goldman, was finalizing terms of an agreement that would see Goldman forgive $593 million of the $1.1 billion debt load. Whitehall would also be released from an additional $200 million in additional debt. In exchange for the debt relief, a mortgage unit of Goldman would gain a 22 percent interest in the company.[5]
In 2009, net revenue fell to $356 million, its lowest since 2005. The company restructured its debt in the last quarter and laid off 600 employees.[12]
In 2011, ACEP completed $20 million in renovations at the Stratosphere, updating its rooms and casino floor and promoted the changes within new marketing campaign. The Stratosphere also added a lounge called Sky Lounge 107 the 108th floor. In addition to the renovations, Stratosphere added a new thrill ride, the Sky Jump.[13]
By 2015, net revenues had increased to $373 million.
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In June 2017, Whitehall agreed to sell ACEP to Golden Entertainment for $850 million.[14]
On October 2, 2017, Golden Entertainment closed on its $850 million purchase of the four casinos owned by ACEP.[1]
Properties[edit]
- Stratosphere Las Vegas — Las Vegas
- Arizona Charlie's Boulder — Las Vegas
- Arizona Charlie's Decatur — Las Vegas
- Aquarius Casino Resort — Laughlin, Nevada
References[edit]
- ^ abhttps://www.reviewjournal.com/business/casinos-gaming/golden-closes-on-850m-deal-for-stratosphere-3-other-casinos/
- ^'American Casino & Entertainment Properties LLC'. Bloomberg L.P.
- ^Knightly, Arnold M. (April 24, 2007). 'Icahn Sells Southern Nevada casinos'. Las Vegas Review-Journal.
- ^Knightly, Arnold (January 10, 2008). 'Stratosphere step closer to changing ownership'. Las Vegas Review Journal.
- ^ abKnightly, Arnold (May 14, 2009). 'Stratosphere parent company posts $1.6 million net loss'. Las Vegas Review Journal.
- ^'Icahn Boosts Federal-Mogul Stake to 75%'. The New York Times. March 3, 2008.
- ^BONNAR, STACEY (May 20, 2006). 'New owners take over at Flamingo'. Mohave Valley Daily News.
- ^'American Real Estate Partners, L.P. Agrees To Sell Its Nevada Gaming Operations to Whitehall Street Real Estate Funds for $1.3 Billion' (Press release). PR Newswire. April 23, 2007.
- ^'Icahn to sell casinos for $1.3 billion'. Los Angeles Times. Associated Press. April 24, 2007.
- ^American Casino & Entertainment Properties LLC 2012 Form 10-K Annual Report
- ^Finnegan, Amanda (4 March 2009). 'Stratosphere to lay off workers, halt pay increases'. Las Vegas Sun. Retrieved 17 September 2011.
- ^Knightly, Arnold (22 March 2010). 'Stratosphere owner cuts losses by 30 percent'. Las Vegas Review Journal.
- ^O’Reiley, Tim (January 14, 2011). 'Stratosphere owners tout $20 million makeover'. Las Vegas Review Journal.
- ^Velotta, Richard N. (June 12, 2017). 'Owner of PT's Pubs to buy Stratosphere, 3 other Nevada casinos'. Las Vegas Review-Journal. Retrieved 2017-06-12.