Docstoc

ASX MEDIA RELEASE FOR IMMEDIATE ... - Crown Limited

Document Sample
ASX MEDIA RELEASE FOR IMMEDIATE ... - Crown Limited Powered By Docstoc
					ASX / MEDIA RELEASE
FOR IMMEDIATE RELEASE
12 December 2007




                               CROWN AGREES TO ACQUIRE CANNERY CASINO RESORTS

MELBOURNE: Crown Limited (ASX: CWN) announced today that it had signed an agreement to acquire
100% of the equity interests in Cannery Casino Resorts LLC (“CCR”) on a cash and debt free basis for
US$1,752 million plus acquisition costs (estimated to be approximately US$49.6 million)

CCR currently operates four casinos in Nevada and Western Pennsylvania in the USA, catering to local and
regional customers:

        The Cannery Hotel and Casino in North Las Vegas, Nevada
        Nevada Palace Casino on the Boulder Strip in East Las Vegas, Nevada
        Rampart Casino in Summerlin (West Las Vegas), Nevada (operated under a management contract)
        The Meadows Racetrack & Casino (temporary facility) located in Pittsburgh, Pennsylvania

CCR is also developing two casino/hotel complexes which are expected to be completed or substantially
completed prior to financial close of the acquisition:

        East Side Cannery in East Las Vegas, Nevada with an expected completion date of September 2008
        (which will replace the existing Nevada Palace)
        The Meadows Racetrack & Casino permanent facility with an expected completion date of April 2009
        (which will replace the existing temporary facility)

At completion of these two construction projects, CCR will operate approximately 8,400 slots and 75 tables
and over 720 hotel rooms throughout its properties.

CCR is owned by Millennium Gaming Inc (58%), which is a joint venture between Bill Paulos and Bill
Wortman, and entities managed by Oaktree Capital Management, LP through affiliates (42%).

The Executive Chairman of Crown, Mr James Packer, said “CCR’s existing shareholders – Bill Paulos, Bill
Wortman and Oaktree - have created first class locals properties located in markets with attractive, long term
growth prospects. Crown’s skills and experience in operating successful locals casinos will enable us to grow
the CCR business further.”

CCR’s joint CEO and part owner, Mr Bill Paulos, said, “Crown is a world class operator. We absolutely believe
that Crown’s acquisition of Cannery Casino Resorts is a great fit for our company and the future of our
employees."

Transaction completion and financial close will not occur until Crown has received all of the necessary gaming
approvals required to own and operate the casinos within the CCR portfolio. This includes approvals from the
Nevada Gaming Commission, Pennsylvania Gaming Control Board and the Pennsylvania Harness Racing
Commission. It is estimated that this process will take at least 12 months.

Accordingly finalisation of the acquisition of CCR is expected to occur after all construction on East Side
Cannery is complete and The Meadows permanent facility is close to completion. The vendors are
responsible for finalisation of the construction of East Side Cannery and The Meadows permanent facility and



G:\Crown Limited\Legal\COMPANY SECRETARIAL\Crown Limited\ASX Announcements\ASX Cannery Acquisition Announcement (12-12-07).doc
the purchase price paid by Crown will be reduced to the extent that there is any construction capital
expenditure remaining to be spent at completion. The purchase price is also subject to an adjustment
dependant on the actual timing of the receipt of the necessary gaming approvals.

Crown’s CEO, Mr Rowen Craigie said, “The acquisition of CCR is strategically and financially compelling for
Crown. CCR provides Crown with an entry point into the US locals casino industry via a well managed and
successful company.”

“CCR presents Crown with high quality new or near new facilities without exposure to construction risk and
without high capital expenditure requirements,” Mr Craigie said

On completion, the acquisition will be funded from Crown’s existing cash reserves and is expected to be
accretive to Crown’s earnings per share.

Macquarie Securities (USA) and Global Leisure Partners, LLP acted as financial advisers and Skadden, Arps,
Slate, Meagher & Flom LLP acted as legal adviser to Crown in this transaction.


ENDS



ATTACHMENT:

Briefing Pack



MEDIA ENQUIRIES:

Gary O’Neill (Crown) – (+613) 9292 7268 or 0401 144 692 (mobile)

Tom Willer (CCR) – (+1 702) 856-5112



COPIES OF RELEASES

Copies of previous media and ASX announcements issued by Crown are available at Crown’s website at
www.crownlimited.com.




G:\Crown Limited\Legal\COMPANY SECRETARIAL\Crown Limited\ASX Announcements\ASX Cannery Acquisition Announcement (12-12-07).doc
Crown Limited (Australia)
  Acquisition of Cannery
Casino Resorts, LLC (USA)



       Briefing Pack
                            1
Cannery Casino Resorts, LLC (“CCR”)


                          58%*                                                        42%**




 Cannery
                          Rampart                                          Eastside
Casino and                                                                                    The Meadows
                           Casino                                          Cannery
Hotel (Las                                                                                    (Pittsburgh)
                        (Las Vegas)                                      (Las Vegas)
  Vegas)




             *   Millennium Gaming is owned equally by Bill Paulos and Bill Wortman
                                                                                                             2
             ** Entities managed by Oaktree Capital Management, L.P.
Cannery Casino Resorts, LLC




     Nevada                   Pennsylvania




                                             3
Las Vegas Market
                                           Speedway



                                       Nellis Air Force Base

                                 Cannery


       Summerlin


           Rampart




                     Las Vegas
                       Strip
                                       East Side Cannery
                                           Boulder
                                            Hwy




                                                               Henderson   4
Pennsylvania Market

                                                                  NY
                   • Erie



                                                        Pennsylvania
                                                                                               •Wilkes-Barre
 OH



                   • Pittsburgh
                     The Meadows                                         •
                                                                   Harrisburg
                                                                                                               •
                                                                                                           Philadelphia

                                                                                                          NJ
           WV                                                                   MD



Category 1 casinos (open)         Category 1 casinos (proposed)    Category 2 casinos (open)     Category 2 casinos (proposed)

                                                                                                                           5
Cannery Casino Resorts, LLC

• Formed in 2001 – has achieved rapid growth in
  operating scale
• Operates conveniently located casinos catering to
  ‘locals’ customers:
  – gaming offering closely matched to customer preferences
  – attractive non-gaming amenities at reasonable prices
  – attentive customer service in a friendly, casual
    atmosphere
  – innovative, focussed promotional programs and offers
• Strong management team with significant skills
  and experience in the gaming industry
  – E.g. New York New York, Excalibur and Luxor casinos in Las
    Vegas
• Proven development experience and track record
  of delivering projects on time and on budget
                                                                 6
Cannery Casino and Hotel – North
Las Vegas, Nevada
                 •   Serves mid-market neighbourhood of North
                     Las Vegas
                      –   Ranked the fastest growing ‘large city’ in the
                          USA in July 2007
                      –   Forecast population annual growth of 6.7%
                          between 2006 – 2020
                      –   The North Las Vegas market has recorded
                          consistently strong growth in recent years,
                          over 10% p.a. from 2003 to 2006
                 •   Near-new property, recently extended to
                     cater to strong demand
                 •   Has grown share of North Las Vegas
                     market every year since opening in 2003
                 •   Property facilities:
                      –   1,967 slots and 21 tables
                      –   200 hotel rooms
                      –   2,000 parking spaces
                      –   Sports book, bingo hall, poker room
                      –   14 screen cinema complex
                      –   2 bars and 5 restaurants




                                                                           7
Rampart Casino – Las Vegas,
Nevada
                 •   Operated under lease within the 541
                     room JW Marriot Resort at
                     Summerlin, west Las Vegas
                 •   Attractive market:
                      – Above average income per capita
                         and population growth
                      – Limited competition – served by
                         only 3 significant properties –
                         Red Rock, Sun Coast and
                         Rampart
                      – Relatively under serviced market
                 •   Property facilities:
                      – 1,230 slots and 26 tables
                      – Race and sports book
                      – Three restaurants and a range of
                         bars
                      – Part of JW Marriott Resort
                 •   Current lease expires 2012


                                                           8
Eastside Cannery – Las Vegas,
Nevada
                 •   Currently under construction and
                     expected to open in Sep 2008
                      – will replace existing Nevada Palace
                        Casino
                 •   Located on the Boulder Hwy in east
                     Las Vegas
                      – Increasingly busy arterial road
                        benefiting from new residential
                        development and connection with new
                        Hoover Dam bypass
                      – Significant $1bn+ market
                      – First new, modern and branded casino
                        on ‘Boulder Strip’ in over 10 years
                 •   Phase I expected to comprise:
                      –   2,000 slots and 26 tables
                      –   314 room hotel
                      –   135 seat race and sports book
                      –   6 bars and 5 restaurants
                 •   Significant excess land available for
                     expansion if customer demand
                     warrants
                                                               9
 The Meadows – Pittsburgh,
 Pennsylvania

• CCR secured one of only 7 Category 1 slot licences in Pennsylvania,
  and one of only 2 in the Pittsburgh area
• Temporary facility opened June 2007 - contains 1,816 slots at
  existing harness racing facility
• Permanent facility targeted to open April 2009, containing:
   –   At least 3,150 slots (Note: license permits up to 5,000 slots)
   –   200 room hotel and luxury spa
   –   A lounge, cabaret and theatre
   –   Range of specialty restaurants and bars, 250-seat food court
   –   Sports bar with simulcast centre
   –   Conference and Convention facilities
• Estimated creation of up to 1,200 local jobs
• As the first property in the Pittsburgh area (only one for next 2
  years), The Meadows has an important first-mover advantage –
  customer loyalty
                                                                        10
The Meadows – Temporary Facility




                                   11
The Meadows – Permanent Facility




                                   12
             Crown Limited




Melbourne,
Melbourne,          Perth,
                    Perth,                                                       Miami & Las
                                                                                 Miami & Las
                                         Macau,
                                         Macau,                                                Las Vegas,
                                                                                               Las Vegas,    Australia/
                                                                                                             Australia/   Las Vegas
                                                                                                                           Las Vegas
 Australia
 Australia         Australia
                   Australia                               UK, 50%
                                                           UK, 50%     Canada,
                                                                       Canada,   Vegas, USA
                                                                                 Vegas, USA
                                         37.9%
                                         37.9%                                                 USA 37.5%
                                                                                               USA 37.5%    New Zealand
                                                                                                            New Zealand       and
                                                                                                                              and
  100%
  100%              100%
                    100%                                    owned
                                                            owned    50% owned
                                                                     50% owned     19.6%
                                                                                    19.6%
                                         owned
                                         owned                                                   owned
                                                                                                 owned      50% owned
                                                                                                            50% owned     Pittsburgh1
                                                                                                                          Pittsburgh1
  owned
  owned             owned
                    owned                                                          owned
                                                                                    owned




                                                                                               LVTI

             1. Subject to US gaming regulatory approval




                                                                                                                                   13
  Crown Limited

• Crown is listed on the Australian Stock exchange with a
  market capitalisation of approx A$9.5bn (US$8.4bn)
• Businesses and investments are in the gaming industry
• Crown wholly owns and operates two of the largest gaming
  and entertainment complexes in Australia
   – Crown Entertainment Complex in Melbourne
   – Burswood Entertainment Complex in Perth
• Crown owns international gaming businesses and
  investments which complement these Australian businesses
• Crown employs over 10,000 people in its Australian
  businesses
• Crown and its key employees are licensed in multiple
  international jurisdictions




                                                             14
 Acquisition Summary

• Acquisition of 100% of CCR for US$1,752m (plus
  acquisition costs) on a cash and debt free basis utilising
  Crown’s existing cash reserves
• Acquired on a post-construction capex basis
   – CCR vendors responsible for entire costs of construction
     completion, and facility opening for both Eastside Cannery and
     The Meadows permanent casino
   – Vendors have proven track record of on time on budget
     developments
• Completion and payment occurs when Crown is licensed in
  both Nevada and Pennsylvania (anticipated to be at least 12
  months)
• The purchase price is subject to adjustment for early/late
  gaming regulatory approvals and construction cost
  overruns/timing delays
                                                                      15
Impact on Crown Limited

• Estimated to be immediately EPS accretive for Crown post
  completion
• Significant uplift in cash flows expected once new projects
  are online
• Post completion of the transaction, Crown will have a solid
  balance sheet and strong cash flows:
   – Investment grade debt profile and credit ratios
   – Further leverage capacity based upon consolidation of
     100% of the CCR cash flows
   – Increased geographic diversity of earnings




                                                                16
Strategic Rationale

• CCR has operations in attractive “locals” markets with limits
  to new competition in the form of limited numbers of
  licences and planning / zoning restrictions

• Delivers Crown high quality new or near new facilities
  without exposure to construction risk and with
  comparatively low ongoing Capex requirements

• CCR has an attractive long-term growth profile, which will
  be enhanced by Crown’s proven track record of successfully
  operating large casinos

• Provides an ideal entry into the US locals casino industry



                                                                  17
Supplementary Information




                            18
Las Vegas Market
• Lowest gaming tax rate in the USA
• Stable and transparent regulatory regime
• High barriers to entry - Neighbourhood Casino Act limits
  future development of new casino properties
• CY2006 total ‘locals’ gaming revenue of US$3.3b
• Strong historic locals gaming growth rate (CY1992-2006
  CAGR: 9%)
• Per capita personal income growth similar over same period
• Population has grown at a CAGR of >5% over the last 15
  years - more than 5x the national average
• Population forecast to grow at CAGR of 4.6% (2006-2010)
  – almost 3.5x the national average
• Employment growth of ~2.7% over next four years
• Key indicators expected to remain strong over the long
  term


                                                               19
Pittsburgh Area Market

• Large locals market – est. population within 50 miles of The
  Meadows is 2.8m and within 100 miles is 6.4m

• Newly established industry with good growth prospects

• Income growth expected to be between 3% and 5% p.a. between
  2006 and 2010

• Actual state-wide gaming win has exceeded initial Government
  estimates on a per machine basis

• Restricted number of competitors – most of which are located in
  Eastern Pennsylvania (~300 miles from Pittsburgh)

• When complete, there will only be 4 gaming facilities within 100
  miles of The Meadows incl. 2 within West Virginia (downtown
  Pittsburgh competitor opening later than expected)


                                                                     20

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:0
posted:2/11/2013
language:Unknown
pages:22