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Canada – Great Canadian completes first casino bundle deal

By - 12 January 2016

Ontario Gaming East Limited Partnership, a partnership in which Great Canadian Gaming Corporation now owns a 90.5 per cent share, completed its previously announced acquisition of Ontario Lottery and Gaming Corporation’s Gaming Bundle 2 (East) for a purchase price of $51.3m.

The properties acquired within the East Gaming Bundle consist of Shorelines Casino Thousand Islands, Shorelines Slots at Kawartha Downs, and a proposed gaming property in the community of Belleville.

With the acquisition complete, the Partnership signed a 20-year casino operating and services agreement with OLG, which is also renewable at OLG’s option for additional consecutive terms of 10 years each. The Partnership will provide OLG a pre-established, guaranteed annual gaming revenue threshold amount plus 30 per cent of gross gaming revenue above the pre-established gaming revenue threshold for each year.

During the 12 months ended September 30, 2015 , the pro forma normalised EBITDA that Ontario Gaming East LP would have earned from operating the existing Thousand Islands Casino and Slots at Kawartha Downs, assuming both that the new COSA had then applied as well as an estimate for the Partnership’s East Gaming Bundle management and administration expenses, is in the range of $16 to $17m. These results, in addition to the guaranteed revenue payments owed to OLG, are expected to increase in the first quarter of 2017, when the new Belleville facility is expected to reach completion and are dependent on the realization of property development plans and revenue growth plans each of which may actually deviate from current expectations.

Great Canadian will manage the property developments and operations of the Partnership through a facility development services agreement and a management services agreement. The company will earn associated fees for providing these services.

Andy LaCroix , Executive Director, Ontario Operations, Ontario Gaming East, said: “Over the last four months, we have worked very closely with OLG to ensure that the transition process is complete and successful for all stakeholders. We are excited about delivering great entertainment amenities and memorable experiences to our guests, welcoming our new colleagues, and becoming an active community participant in the Eastern Ontario region.”

“Great Canadian is pleased to now own 90.5 per cent of its Ontario Gaming East LP subsidiary, an increase from the previous 50.1 per cent share it held,” said Rod Baker, the company’s President and Chief Executive Officer. “We were already managing the day-to-day operations and property development plans of our subsidiary, so this was a great opportunity to increase our economic interest in an already exciting investment opportunity. The additional 40.4 per cent of partnership units were obtained on the same economic terms as the Company invested for its original 50.1 per cent share.”

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