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US – Churchill Downs forced to rethink Lady Luck acquisition

By - 10 July 2018

US racino operator Churchill Downs’ has been forced to rethink its deal to buy Lady Luck Casino in Vicksburg, Mississippi from Eldorado Resorts but Churchill will continue with its pursuit of Presque Isle Downs & Casino in Erie, Pennsylvania.

Following an investigation by the US Federal Trade Commission, the Lady Luck in Vicksburg has been dropped from the deal with the Lady Luck Casino Nemacolin in Farmington, Pennsylvania, being brought into the deal as a ‘management only’ option.

Churchill Downs will pay $100,000 to take on the role of an Eldorado affiliate to manage the Lady Luck Casino Nemacolin. Churchill will pay Eldorado a $5m termination fee to free itself from the deal to buy Lady Luck Nemacolin. The Presque Isle transaction will be bought for $178.9m and remains dependent on customary closing conditions.

Gary Carano, Chairman and Chief Executive Officer of Eldorado, said: “We are delighted to work with the team at Churchill Downs to move forward with our planned divestiture of Presque Isle Downs and believe the transfer of the management of Lady Luck Nemacolin to Churchill will allow Eldorado Resorts to realise meaningful tax benefits. Additionally, while the termination of the Lady Luck Vicksburg transaction, including the receipt of the termination fee, is not meaningful to our Adjusted EBITDA or leverage expectations given our growing scale, we are pleased that Lady Luck Vicksburg will remain a part of the Eldorado family going forward.

“Importantly, our recent agreements to acquire Tropicana Entertainment and the Grand Victoria Casino in Elgin, Illinois, both of which are expected to close late this year, are highly accretive, further increase the scale of our regional gaming platform and significantly accelerate the Company’s free cash flow growth. Our most recent initiatives to enhance shareholder value, including the Tropicana and Grand Victoria transactions and our agreement with The Cordish Companies to master plan, design and develop a new world-class, mixed-use entertainment and hospitality destination adjacent to our Isle Casino Racing Pompano Park in Florida, reflect our commitment to expand our platform into growth markets that have the potential for high returns while leveraging our asset base to build new value for our shareholders.”

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