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Canada – Canadian casino giant Gateway to merge with Leisure Acquisition Corp.

By - 2 January 2020

Gateway Casinos & Entertainment Limited, one of the largest and most diversified gaming and entertainment companies in Canada, is to merge with Leisure Acquisition Corp. in a transaction in a transaction with a pro forma enterprise valuation of approximately US$1.115bn

Gateway, which is currently majority owned by The Catalyst Capital Group, has also announced that, shortly following completion of the Transaction, Marc J. Falcone, currently a Director of Leisure, will become President and Chief Executive Officer of Gateway. Upon Mr. Falcone’s appointment becoming effective, Tony Santo, Gateway’s current CEO, will retire from the company. Mr. Santo will continue as an adviser to the Board of Directors and Mr. Falcone for three months following his retirement in order to assist with an orderly transition.

With 25 properties across British Columbia and Ontario – up from 10 in 2015 – Gateway has significantly expanded its footprint, while diversifying and expanding its product offering to include well-known proprietary casino and restaurant brands. Over the last six years, Gateway’s multi-pronged strategic initiatives have driven (i) improved guest experiences, (ii) strong revenue growth, (iii) consistent Adjusted EBITDA i growth, and (iv) industry-leading free cash flow conversion.ii Gateway has and continues to successfully execute on its growth initiatives to drive year-over-year improvement with year-to-date (through September 30, 2019) growth in Adjusted EBITDA of 10.8 per cent to US$103.7m.

Gabriel de Alba, Managing Director and Partner of Catalyst and Executive Chairman of Gateway, said: “With its strong corporate and property operating teams, diversified growth initiatives, and industry-leading operating model, Gateway has built tremendous momentum and established a solid foundation for ongoing growth. We are proud of the team and their many accomplishments over the last six years which include doubling our locations and adjusted EBITDA, increasing our slot machines by nearly three-times, increasing our table games by over two-times and adding 56 new F&B outlets across British Columbia and Ontario. The disciplined execution of our near- and long-term strategies has created significant value and returns over the years for all of the Company’s shareholders. We are thankful to Tony for his leadership of Gateway and his key role going forward.”

“As we seek to execute against our many growth initiatives and deliver additional shareholder value, we are excited to partner with Leisure and appreciative of the confidence in our future as demonstrated by HG Vora’s investment commitment. We welcome Marc to Gateway and look forward to his leadership as our incoming CEO. Lorne, Dan and Marc’s respective industry experience and extensive relationships, combined with access to public capital markets, will favourably position the Company to accelerate its strategies to deliver strong, profitable growth and increased free cash flow. Just as importantly, this transaction will provide Gateway with the foundation for a very promising future as a leading, diversified gaming and entertainment platform throughout North America. The entire Gateway team looks forward to working with the team at Leisure to create value for shareholders over the long-term,” Mr. de Alba concluded.

Leisure’s Executive Chairman A. Lorne Weil and Chief Executive Officer Daniel B. Silvers said: “Early in our lifecycle, we identified Gateway as an attractive opportunity to leverage our team’s deep experience and skills in the leisure and gaming sector. We are excited to partner with the Gateway team, led by Marc, to accelerate Gateway’s growth through the many high-return initiatives already in place as well as by pursuing potential future accretive transactions across North America. Gateway is recognised across the industry for its operational expertise and focus on providing great gaming, entertainment and food and beverage experiences, world-class guest service and financial discipline. We look forward to being partners with Gabriel, Marc and the entire Gateway team as we enter what we expect will be the Company’s next phase of growth.”

“I am excited to enter this new role as CEO of Gateway,” commented Marc J. Falcone, Director of Leisure and incoming CEO of Gateway. Mr. Falcone concluded: “I am grateful for the confidence placed in me by Gabriel, HG Vora and the leadership of Leisure. I believe the Canadian gaming market offers unparalleled growth opportunities and Gateway has always been a platform that I found to be highly-compelling. I look forward to creating significant shareholder value alongside the rest of the Gateway management team.”

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