Churchill Downs Incorporated to acquire Oxford Casino in Oxford, Maine
29 Mar 2013
The transaction, which is dependent on the Company securing a gaming license from the Maine Gaming Control Board, and on other usual and customary closing conditions, is anticipated to close in the fourth-quarter of 2013. If certain closing conditions are not satisfied, the Company could be obligated to pay an $8 million termination fee.
The property opened in June 2012 and completed an expansion of its gaming floor in early October 2012; thus, only limited actual financial data is available. Based on the Company's projections and Oxford's management team's budget, the Company expects that at closing the transaction price will represent a multiple of approximately 7 1/2 times the property's then-trailing twelve month EBITDA (earnings before interest, taxes, depreciation and amortization.) The transaction is expected to be immediately accretive to earnings per share and provide annual free cash flow of approximately $12.5 million.
The transaction will be funded through the Company's existing credit facility. While the acquisition is an equity transaction, for tax purposes it will be treated as an asset transaction which the Company expects will provide tax benefits that will effectively reduce the transaction price multiple.
CDI Chairman and CEO Robert L. Evans explained why Oxford Casino was an appealing investment for the Company.
"The acquisition of Oxford continues our focus on investing capital in gaming-friendly states, in newer properties, in what we believe are competitively defensible markets, and at valuations that we believe will result in significant future free cash flow generation at rates of return attractive to our shareholders," Evans said. "The Oxford team of over 400 employees has done an exceptional job and we look forward to welcoming them into the Churchill Downs family."
Bob Bahre, a founder of Black Bear Realty Co., LLC, said his primary reason for getting involved in the project was to bring jobs to the region.
"We are extremely proud of the property and, more importantly, of the incredible team that works at Oxford Casino. Although we developed the property, operating casinos is not our core business, and we thought that the time was right to look for a major gaming company that could take this property to the next level. We are confident that we have found such a group in Churchill Downs, and we look forward to welcoming them into the community."
The property is owned by Black Bear Realty Co., LLC. Sidley Austin LLP is acting as legal advisor to the Company in this transaction. Wells Fargo Securities LLC is acting as financial advisor and Greenberg Traurig, LLP is acting as legal advisor to the Black Bear Realty Co., LLC in this matter.
About Oxford Casino
Oxford, which opened in June 2012 and underwent an expansion completed in October 2012, is located on 100-acres about 40 minutes northwest of Portland in the heart of southern Maine. The property includes a 25,000-square-foot single-level gaming floor with 790 Class III slot machines and 22 table games. It also hosts a 140-seat casual restaurant - Oxford Grill, a 12-seat casino bar and a grab-and-go.
About Churchill Downs Incorporated
Churchill Downs Incorporated (CDI) (CHDN), headquartered in Louisville, Ky., owns and operates the world-renowned Churchill Downs Racetrack, home of the Kentucky Derby and Kentucky Oaks, as well as racetrack and casino operations and a poker room in Miami Gardens, Fla.; racetrack, casino and video poker operations in New Orleans, La.; racetrack operations in Arlington Heights, Ill.; a casino resort in Greenville, Miss.; as well as a casino hotel in Vicksburg, Miss.; CDI also owns the country's premier online wagering company, TwinSpires.com; the totalisator company, United Tote; Luckity.com, offering fun games online for a chance to win cash prizes; Bluff Media, an Atlanta-based multimedia poker company; and a collection of racing-related telecommunications and data companies. In addition, CDI's 50 percent owned joint venture, Miami Valley Gaming and Racing LLC, is currently constructing a video lottery terminal and harness racing facility in southwest Ohio.