Eldorado Resorts, Inc. (NASDAQ:ERI) Files An 8-K Regulation FD Disclosure
Item7.01.
| Regulation FD Disclosure. |
Eldorado Resorts, Inc., a Nevada corporation (ERI or the
Company), Eagle I Acquisition Corp., a Delaware corporation
(Merger Sub A) and a wholly-owned subsidiary of ERI, Eagle II
Acquisition Company LLC, a Delaware limited liability company
(Escrow Issuer) and a wholly-owned subsidiary of ERI, and Isle of
Capri Casinos, Inc., a Delaware corporation (Isle), entered into
a merger agreement (the Merger Agreement) on September19, 2016
providing for a series of mergers (the ERI-Isle Merger) that will
result in Isle becoming a wholly-owned subsidiary of ERI. On
March13, 2017, ERI announced that it and Escrow Issuer intended
to engage in certain financing transactions in connection with
the ERI-Isle Merger. Set forth below is certain information
provided to potential lenders in the proposed financing. Unless
the context otherwise requires, references in this current report
on Form 8-K to the Registrant, ERI, we, our and us refer to
Eldorado Resorts, Inc. and its consolidated subsidiaries,
including Isle and its subsidiaries following consummation of the
ERI-Isle Merger.
Business
strengths strategies
Increased scale
and financial profile
We believe that
the ERI-Isle Merger will combine two complementary regional
gaming asset portfolios that will strengthen the financial
profile and enhance the size, scale and diversification of the
combined company. We anticipate that the ERI-Isle Merger will
provide an enhanced footprint for the combined company in
attractive markets by doubling the gaming geographies of
operation from five to ten and almost tripling the number of
properties from seven to nineteen. We also anticipate that the
ERI-Isle Merger (after giving effect to the Isle Property
Dispositions) will strengthen our financial profile, creating a
combined company with approximately $1.7billion of net revenues
for the year ended December31, 2016 after giving pro forma effect
to the ERI-Isle Merger (a 94% increase from ERI on a standalone
basis) and $394.2million of combined Adjusted EBITDA for the year
ended December31, 2016 after giving effect to expected cost
synergies of $35million (a 135% increase from ERI on a standalone
basis), making the combined company the nations second largest
regional owner-operator of self-owned casinos based on net
revenues for the year ended December31, 2016 and third largest in
terms of Adjusted EBITDA for the year ended December31,
2016.
In addition, after
giving effect to the ERI-Isle Merger and the Isle Property
Dispositions, the combined company is anticipated to have, in the
aggregate, approximately 6,550 hotel rooms (a 35% increase from
ERI on a standalone basis), approximately 560 table games (a 92%
increase from ERI on a standalone basis) and approximately 20,100
slot machines and VLTs (a 105% increase from ERI on a standalone
basis).
Increased scale
and diverse portfolio across key geographic markets and customer
segments
We are
geographically diversified across the United States. After giving
pro forma effect to the ERI-Isle Merger, no single state
accounted for more than 18% of our combined adjusted property
EBITDA for the year ended December31, 2016. Our customer pool
draws from a diversified base of both local and out-of-town patrons. For
example, approximately 20% of our customer base at Eldorado Reno
is local, while 80% visit from out-of-town and utilize our hotel,
restaurants and other amenities for a full-service gaming
experience. We have also initiated changes to our marketing
strategy to reach more potential customers through targeted
direct mailings and electronic marketing. We believe we have
assembled a platform on which we can continue to grow and provide
a differentiated customer experience.
Opportunity to
generate operational efficiencies
We intend to implement our
strategy of focusing on margin enhancement and customer service
and experiences across the portfolio by marrying best practices
from both companies. Led by our proven gaming, hotel management
and food and beverage teams with a long-term record of operating
execution and integration of acquired properties, we believe that
ERI will be positioned for long-term success. Combining the
assets, management, personnel, operations and other resources of
these two organizations is expected to create substantial near-
and long-term synergies. Meaningful potential cost savings are
anticipated by consolidating public company, administrative and
other costs. We currently expect to achieve approximately
$35million in cost synergies as a result of the ERI-Isle Merger,
which is expected to be realized within the first year following
completion of the ERI-Isle Merger.
Significant free
cash flow generation
We believe that the
transaction will be accretive to ERIs free cash flow, which we
define as Consolidated Adjusted EBITDA less maintenance capital
expenditures, cash taxes and cash interest expense, inclusive of
anticipated cost synergies of approximately $35million in the
first year following the completion of the transaction and giving
effect to the Isle Property Dispositions. Notably, after giving
effect to the ERI-Isle Merger and the Refinancing Transactions,
and the cost synergies of approximately $35million expected to be
realized within the first year following completion of the
ERI-Isle Merger,
we expect our net leverage ratio to be approximately 5.4x at
closing based on the combined Adjusted EBITDA of ERI and Isle for
the year ended December31, 2016. We plan to use the free cash
flow expected to be generated by the combined company to reduce
leverage and pursue future growth
opportunities.
Proven ability of
successful integration
We have demonstrated our
ability to successfully execute complementary acquisitions of
regional gaming and entertainment destinations. For example, our
acquisition of MTR Gaming Group, Inc. (MTR Gaming) in September
2014 and our acquisition of the 50% remaining interest in the
Silver Legacy Resort Casino and Circus Circus Reno (Circus Reno)
in November 2015 illustrate our ability to successfully integrate
operations and realize synergies.
Continued focus on
personal service and high quality
amenities
We focus on customer
satisfaction and delivering superior guest experiences. We seek
to provide our customers with an extraordinary level of personal
service and popular gaming, dining and entertainment experiences
designed to exceed customer expectations in a clean, safe,
friendly and fun environment. Our senior management is actively
involved in the daily operations of our properties, frequently
interacting with gaming, hotel and restaurant patrons to ensure
that they are receiving the highest level of personal attention.
Management believes that personal service is an integral part of
fostering customer loyalty and generating repeat business. We
continually monitor our casino operations to react to changing
market conditions and customer demands. We target both
premium-play and value-conscious gaming patrons with
differentiated offerings at our state-of-the-art casinos,
which feature the latest in game technology, innovative bonus
options, dynamic signage, customer-convenient features and
non-gaming amenities at a reasonable value and price
point.
Management team
with deep gaming industry experience and strong local
relationships
We have an experienced
management team that includes, among others, Gary Carano, our
Chief Executive Officer and the Chairman of the Board, who has
more than thirty years of experience in the gaming and hotel
industry. Mr.Carano was the driving force behind ERIs development
and operations in Nevada and Louisiana and ERIs acquisition of
MTR Gaming and Circus Reno. In addition to Gary Carano, our
senior executives have significant experience in the gaming and
finance industries. Our extensive management experience and
unwavering commitment to our team members, guests and equity
holders have been the primary drivers of our strategic goals and
success. We take pride in our reinvestment in our properties and
the communities we support along with emphasizing our
family->
| Item8.01. | Other Events. |
On March13, 2017, the Company
issued a press release announcing that Escrow Issuer intends to
offer $375,000,000 aggregate principal amount of senior notes due
2025. A copy of the press release is attached as Exhibit 99.2
hereto and is hereby incorporated in reference to this Item
8.01.
| Item9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits: |
|
ExhibitNo. |
Description |
|
| 99.1 | Unaudited pro forma condensed combined financial statements. | |
| 99.2 | Press Release dated March13, 2017. |
About Eldorado Resorts, Inc. (NASDAQ:ERI)
Eldorado Resorts, Inc. (ERI) is a gaming and hospitality company. The Company owns and operates gaming facilities located in Ohio, Louisiana, Nevada, Pennsylvania and West Virginia. The Company’s segments include Nevada, Louisiana and Eastern. The Company owns and operates various properties, such as Eldorado Resort Casino Reno, which is a 814-room hotel, casino and entertainment facility; Silver Legacy Resort Casino, which is a 1,711-room themed hotel and casino; Circus Circus Reno, which is a 1,571-room hotel-casino and entertainment complex; Eldorado Resort Casino Shreveport, which is a 403-room, all suite art deco-style hotel and tri-level riverboat dockside casino; Mountaineer Casino, Racetrack & Resort, which is a 354-room resort with a casino and live thoroughbred horse racing; Presque Isle Downs & Casino, which is a casino and live thoroughbred horse racing facility with slot machines, table games and poker located in Erie, Pennsylvania, and Eldorado Gaming Scioto Downs. Eldorado Resorts, Inc. (NASDAQ:ERI) Recent Trading Information
Eldorado Resorts, Inc. (NASDAQ:ERI) closed its last trading session 00.00 at 18.05 with 658,520 shares trading hands.
