Eldorado Resorts on Friday closed its $385 million sale of three casinos – two in Missouri and one in West Virginia – ahead of next year’s planned merger with Caesars Entertainment.
The properties – Isle Casino Cape Girardeau and Lady Luck Casino Caruthersville in Missouri and Mountaineer Casino Racetrack and Resort in West Virginia – are being acquired by Century Casinos and real estate investment trust VICI Properties.
The Missouri casinos could have had federal antitrust implications as part of the $17.3 billion merger between Eldorado and Caesars, which would give the combined entity almost 60 casinos in 18 states.
Eldorado is also in the process of selling Isle of Capri Casino Kansas City in Kansas City, Missouri and Lady Luck Casino Vicksburg in Vicksburg, Mississippi for $230 million to Twin River Worldwide Holdings.
When the merger with Caesars is complete, the company will still operate three casinos in Missouri – Lumiere Place in St. Louis, Isle of Capri in Boonville, and Harrah’s North Kansas City.
“The agreements to divest Mountaineer Casino, Isle Casino Cape Girardeau and Lady Luck Casino Caruthersville are consistent with our continued focus on reducing debt ahead of the expected closing for the Caesars transaction in the first half of 2020,” Eldorado CEO Tom Reeg said in a statement.
Century Casinos acquired the operations of the three properties for approximately $107 million and VICI Properties acquired the land and real estate for approximately $278 million. Century will operate the casinos under a long-term lease.
The master lease has an initial total annual rent of $25 million and an initial term of 15 years, with four 5-year tenant renewal options.
“We are very excited to be expanding into Missouri and West Virginia,” Century Casinos Co-CEOs Erwin Haitzmann and Peter Hoetzinger said in a joint statement. “Cape Girardeau, Caruthersville and Mountaineer are great additions to our portfolio. We look forward to working with the staff and communities to continue the current success at these properties into the future.”
VICI President John Payne said in a statement the transaction further diversifies the company’s tenant roster and adds a new market in West Virginia.
“We are excited to partner with Century, as they are expert operators of small to mid-sized regional assets and we look forward to supporting the Century team in further growing their U.S. regional gaming platform,” Payne said.
Eldorado and Caesars received shareholder approval from stockholders of both companies for the merger last month and the deal was approved by Missouri gaming regulators this week.
Under terms of the agreement, Eldorado will pay $8.40 per share in cash and 0.0899 shares of Eldorado stock for each Caesars share, or $12.75 per share. The combined business will be called Caesars and its shares will be traded on the Nasdaq.
Both companies, during their recent third quarter earnings commentary, committed to reducing the number of casinos operated in markets where federal anti-trust issues could exist, and reducing overall corporate costs by $500 million. Current Caesars CEO Tony Rodio said last week the company expects to reduce costs by $75 million to $100 million by the time the merger closes.
As part of the merger, three Caesars properties under the Harrah’s brand in Atlantic City, Laughlin, Nevada and New Orleans were sold to VICI Properties for a combined $1.8 billion. VICI will lease the operations back to Eldorado for total annual rent of $154 million.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
