Century Casinos Acquires Mountaineer Operations
Publicly traded Century Casinos entered into a definitive agreement June 17 to acquire the operating assets of Mountaineer Casino, Racetrack, and Resort in West Virginia in a deal that also included purchasing the operations of two Missouri casinos from Eldorado Resorts for approximately $107 million.
Simultaneous with the closing of the transaction, VICI Properties will acquire the real estate assets of the three properties for approximately $278 million and Century Casinos will enter into a lease agreement with VICI for the three casino properties. The transaction, expected to close in early 2020, is subject to regulatory approval.
In April Century Casinos opened Century Mile Racetrack and Casino in South Edmonton, Alberta, Canada with Thoroughbred racing beginning April 28. In a Monday conference call with analysts and investors, Century Casinos co-CEO Peter Hoetzinger said the company plans to use some of the expertise it has developed in marketing the South Edmonton racino at Mountaineer.
Century Casinos co-CEO Erwin Haitzmann said the company is comfortable acquiring Mountaineer despite added competition from Ohio and Pennsylvania casinos in recent years. When the casino first opened there in 1994 it faced no regional competition.
"Mountaineer has found a very specific market segment in that market," Haitzmann said of Mountaineer, which features a 357-room hotel, approximately 1,486 slot machines, 36 table games, a poker room, racetrack, and five dining venues. "It could be described as a resort destination for the mid-market, rather than the higher-end Vegas casinos."
Century Casinos will finance the $107 million overall purchase with a new credit facility that is anticipated to be issued by Macquarie Capital.
"This transaction further highlights our commitment to enhancing shareholder value," Haitzmann said. "Cape Girardeau, Caruthersville, and Mountaineer expand the strategic diversity of Century Casinos with attractive assets in strong, stable markets. The expected increase to our free cash flow will allow us to remain well positioned to reduce leverage and evaluate additional strategic growth opportunities."
"The acquisition of the operations of Cape Girardeau, Caruthersville, and Mountaineer will transform Century Casinos into a premier regional casino operator in North America," Hoetzinger said. "We believe these assets are a great fit for our portfolio and will complement Century Casinos' expertise in operating small to mid-sized casinos. We are pleased to partner with VICI Properties to structure this transaction in a manner that we expect will be immediately accretive to our operating results."
In the conference call, Hoetzinger noted all three operations are a good fit for the company.
"These are three quality assets in strong and stable markets, each enjoying a market-leading position and each with a track record of producing solid and growing profitability," Hoetzinger said, saying the acquisition effectively doubles the size of the company. "We chose these three casinos because they met all our criteria. They are mid-sized operations that target the mid-market, local customer. They have been delivering strong and steady cash flow for many years."