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Penn National closed Louisiana casino purchase

Penn National Gaming has completed the purchase of the operations of Margaritaville Resort Casino in Bossier City, Louisiana (“Margaritaville”), for total consideration of $115 million.

Penn National completes Louisiana casino purchase in its press release, Penn said the transaction was financed with incremental borrowings under its revolving credit facility. According to the company, the purchase price represents a multiple of about 5.0x the expected trailing 12-month adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for 2018, plus management fee. The multiple is expected to later fall to 4.5x on “expected operating synergies and cost savings.”

Along with the purchase of the Margaritaville facility, which was built in 2013, Penn has agreed to pay $23 million in initial annual rent to VICI Properties, new owner of the land on which the resort sits, as part of a 15-year lease agreement with four five-year renewal options.

“This acquisition is in line with our efforts to enhance shareholder value as it is immediately accretive to our free cash flow, further diversifies our revenue and operating base and offers a well-defined path to the realization of synergies that are expected to lower the purchase multiple. Margaritaville is one of the leading casino resorts in Bossier City, and we expect that our proven integration and operating strategies will help grow operating margins as well as free cash flow contributions from the property”, – commented Timothy J. Wilmott, Penn National’s Chief Executive Officer.

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