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US – Churchill Downs investing in Rivers Casino Des Plaines

By - 5 November 2018

Churchill Downs is buying ownership in Midwest Gaming, the parent company of Rivers Casino Des Plaines in Des Plaines, Illinois, for $326m.

Post-closing, CDI and Rush Street will jointly control Rivers Des Plaines as Rush Street has with Clairvest since the casino’s opening. Additionally, Rush Street and the Rush Street-led management team will continue to manage the day-to-day operations of Rivers Des Plaines.

Following the closing of the Sale Transaction, the parties expect to enter into a recapitalization transaction pursuant to which Midwest Gaming will use approximately $300m in proceeds from new credit facilities to redeem, on a pro rata basis, additional Midwest Gaming units held by Rush Street and Casino Investors.

The Sale Transaction and Recapitalization will result in CDI owning at least 50.1 per cent of Midwest Gaming. Should members of Rush Street and Casino Investors elect to participate in CDI’s offer to purchase additional units in the Sale Transaction, CDI’s ownership of Midwest Gaming following the Transactions would increase, as would its cash investment. CDI’s cash purchase price in the Sale Transaction is subject to a cap of $500m, which is expected to pay for all of Clairvest’s units and those of the other investors being sold in the Sale Transaction. After giving effect to the Transactions, Rush Street expects to own largely the same ownership interest percentage in Midwest as it currently holds.

CDI and Rush Street equally will split priority distributions of two percent of Midwest Gaming’s annual gross revenue. In addition, CDI, Rush Street and Casino Investors will be entitled to receive pro rata quarterly tax distributions calculated based on the highest applicable U.S. individual federal tax rate plus the higher of California or New York individual state tax rates, as well as other distributions permitted under new credit facility covenants.

CDI CEO Bill Carstanjen said the transactions reflect CDI’s strategy of investing in gaming properties with stable, predictable cash flows in diverse markets, particularly in populous states that may ultimately grant access to online casino gaming and sports betting to their brick-and-mortar casino license holders.

“We are thrilled to partner with Neil Bluhm and Rush Street Gaming in Rivers Des Plaines. This property is the crown jewel of Illinois gaming and one of the country’s premier casinos,” Carstanjen said. “This is an exciting opportunity for CDI, given Rivers Des Plaines’ superior design, unparalleled location in the Chicagoland market, high-quality amenities and outstanding team.”

“Churchill Downs Incorporated has created significant shareholder value over the years and we are excited to be partnering with them” said Greg Carlin, CEO of Midwest Gaming and Rush Street Gaming. “We will work together to ensure that Rivers Casino in Des Plaines continues to be one of the most successful casino destinations in North America.”
The Transactions, which are contingent upon approval by the Illinois Gaming Board and other usual and customary closing conditions, are anticipated to close in the first half of 2019. The Transactions mark the second casino transaction involving CDI and Rush Street, with CDI having acquired Riverwalk Casino and Hotel in Vicksburg, Mississippi from Rush Street in 2012.

Opened in 2011, Rivers Des Plaines, located on the Des Plaines River in Des Plaines, Illinois, two miles from O’Hare International Airport and fifteen miles from downtown Chicago, features a 44,000-square-foot single-level gaming floor with 983 slot machines and 58 table games; seven dining and entertainment options; and a multi-functional event center.

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