Churchill Downs Incorporated (CDI) has announced that it has signed an asset purchase agreement, related to the management of Eldorado Resorts Inc’s (ERI) Lady Luck Casino Nemacolin in Farmington, Pennsylvania, which it is to assume.
The $100,000 deal was previously announced following the collapse of the $50.6m purchase of ERI’s Lady Luck Casino in Vicksburg, Mississippi, agreed earlier this year, following federal intervention.
Coming in the form of the Federal Trade Commission (FTC), an independent agency of the US government, a request was sent for additional information and documentary material.
Wanting to ensure that the deal was in accordance with the Hart-Scott-Rodino Antitrust Improvements Act 1976, mutual agreement relating to its cancellation was reached.
CDI in turn agreed to a $5m termination fee as stipulated in the parties initial acquisition agreement, following consideration of the time and expense needed to reply.
This led to the fresh agreement to assume, as well as acquiring certain assets relating to, the management of ERI affiliate the Lady Luck Casino Nemacolin, closing of which is conditioned to another previously announced purchase – the $179.8m Presque Isle Downs & Casino in Erie, Pennsylvania.
In a press statement following the FTC’s request, CDI explained: “Concurrently with the entry into the Termination Agreement, CDI and ERI also entered into the Amendment, pursuant to which CDI and ERI have agreed to, among other things: (i) eliminate the consummation of the Lady Luck Vicksburg Transaction as a condition to closing the Presque Isle Transaction, (ii) withdraw the parties’ filings previously submitted in connection with the HSR Act and submit new filings pursuant to the HSR Act to reflect the transactions contemplated by the Amendment and the Termination Agreement and, (iii) cooperate in good faith, subject to certain conditions, to enter into an agreement pursuant to which CDI will assume the rights and obligations of an affiliate of ERI to operate the Lady Luck Casino Nemacolin in Farmington, Pennsylvania for cash consideration of $100,000.
“The Presque Isle Transaction reflects a stand-alone purchase price of $178.9 million subject to certain working capital and other purchase price adjustments and remains dependent on usual and customary closing conditions.”
CDI has stated an expectation that both deals are to close in the fourth quarter of this year, subject to receipt of gaming licenses from the Pennsylvania Gaming Control Board, and a racing license from the Pennsylvania State Horse Racing Commission.