Purchase price represents an approximate 11
times multiple on average Adjusted Property EBITDA from
2019-2021
LAS
VEGAS, June 9, 2022 /PRNewswire/ -- MGM
Resorts International (NYSE: MGM) ("MGM Resorts" or the "Company")
today announced that it has reached an agreement to sell the
operations of Gold Strike Tunica ("Gold Strike") to Cherokee Nation
Entertainment Gaming Holdings, LLC ("CNE"), a subsidiary of
Cherokee Nation Businesses, for $450
million in cash, subject to customary adjustments.
"I want to thank all of our Gold Strike employees who have
consistently delivered world-class gaming and entertainment
experiences to our guests," said Bill
Hornbuckle, CEO & President, MGM Resorts
International. "Gold Strike is a wonderful property with a
bright future ahead. Strategically, though, we decided to
narrow our focus in Mississippi to
a single resort – Beau Rivage – and dedicate more of our time and
resources towards continuing to drive success at that leading,
world-class resort and casino."
For the twelve months ended December 31,
2021, Gold Strike reported net income of $81.1 million and Adjusted Property EBITDAR of
$115 million1, reflecting
benefits from certain market specific factors in the last
year. Pre-pandemic, Gold Strike reported Adjusted Property
EBITDAR of $67 million in 2019.
At the closing of the transaction, MGM Resorts' master lease
agreement with VICI Properties Inc. (NYSE: VICI), which currently
includes Gold Strike, will be amended to reduce annual rent by
$40 million. The Company expects net
cash proceeds after taxes and estimated fees to be approximately
$350 million.
"This is a great outcome for the Company as we are able to
reprioritize future capital expenditures toward opportunities that
will enhance the customer experience at our other locations," said
Jonathan Halkyard, CFO &
Treasurer, MGM Resorts International. "We appreciate VICI, as
the real estate owner of Gold Strike, working constructively with
CNE to facilitate a new lease agreement."
Gold Strike opened in 1994 and was acquired by MGM Resorts in
2005. At 32 stories tall, the iconic property is one of the most
recognizable buildings in Tunica and towers above all other
structures. When it was built the gold tower was reported to be the
tallest building in Mississippi.
The transaction is expected to close in the first half of 2023,
subject to regulatory approvals and other customary closing
conditions.
Weil, Gotshal & Manges LLP served as legal counsel to MGM
Resorts.
About MGM Resorts International
MGM Resorts
International (NYSE: MGM) is an S&P 500® global entertainment
company with national and international locations featuring
best-in-class hotels and casinos, state-of-the-art meetings and
conference spaces, incredible live and theatrical entertainment
experiences, and an extensive array of restaurant, nightlife and
retail offerings. MGM Resorts creates immersive, iconic experiences
through its suite of Las
Vegas-inspired brands. The MGM Resorts portfolio encompasses
33 unique hotel and gaming destinations globally, including some of
the most recognizable resort brands in the industry. The Company's
50/50 venture, BetMGM, LLC, offers U.S. sports betting and online
gaming through market-leading brands, including BetMGM and
partypoker. The Company is currently pursuing targeted expansion in
Asia through the integrated resort
opportunity in Japan. Through its
"Focused on What Matters: Embracing Humanity and Protecting the
Planet" philosophy, MGM Resorts commits to creating a more
sustainable future, while striving to make a bigger difference in
the lives of its employees, guests, and in the communities where it
operates. The global employees of MGM Resorts are proud of their
company for being recognized as one of FORTUNE® Magazine's World's
Most Admired Companies®. For more information, please visit us at
www.mgmresorts.com. Please also connect with us @MGMResortsIntl on
Twitter as well as Facebook and Instagram.
About Cherokee Nation
Businesses:
Cherokee Nation Businesses is the tribally
owned holding company of the largest Indian Nation in the United States. The Cherokee Nation and its
businesses employ 11,000 people. CNB blends its heritage of
ingenuity with modern business experience to solve complex
challenges, serve clients nationwide and to remain one of the
drivers of Cherokee Nation's prosperity and stability. CNB owns
companies in the consulting, health sciences, hospitality, real
estate, technology, distribution and logistics, engineering,
manufacturing, construction and environmental services industries.
For more information, please
visit www.CherokeeNationBusinesses.com or follow CNB
on Facebook, Twitter and LinkedIn.
About Cherokee Nation Entertainment:
Cherokee Nation
Entertainment is the gaming and hospitality company of the Cherokee
Nation. The company owns and operates Hard Rock Hotel &
Casino Tulsa and nine Cherokee Casinos, including a horse racing
track, three resort hotels, three golf courses and other retail
operations. For more information visit www.hardrockcasinotulsa.com
and www.cherokeecasino.com.
Forward Looking Statements:
Statements in this release
that are not historical facts are forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act
of 1995, as amended, and involve risks and/or uncertainties,
including those described in the Company's public filings with the
Securities and Exchange Commission. Forward-looking statements can
be identified by the use of forward-looking terminology such as
"believes," "expects," "could," "may," "will," "should," "seeks,"
"likely," "intends," "plans," "pro forma," "projects," "estimates"
or "anticipates" or the negative of these words and phrases or
similar words or phrases that are predictions of or indicate future
events or trends and that do not relate solely to historical
matters. The Company has based forward-looking statements on
management's current expectations and assumptions and not on
historical facts. Examples of these statements include, but are not
limited to, the Company's expectations regarding the closing of the
sale and any benefits expected to be received from the sale,
including the Company's expected net cash proceeds. Forward-looking
statements depend on assumptions, data or methods that may be
incorrect or imprecise, and the Company may not be able to realize
them. The Company does not guarantee that the transaction or other
events described herein will happen as described (or that they will
happen at all). These forward-looking statements involve a number
of risks and uncertainties. Among the important factors that could
cause actual results to differ materially from those indicated in
such forward-looking statements include risks related to the
Company's ability to complete the transaction on the terms
described herein or all, the satisfaction of the closing
conditions, including the receipt of regulatory approvals, to which
the completion of the transaction is subject, which could delay or
prevent the completion of the transaction, the continued impact of
the COVID-19 pandemic on the Company's business, the effects of
economic conditions and market conditions in the markets in which
the Company operates and competition with other destination travel
locations throughout the United
States and the world, the design, timing and costs of
expansion projects, risks relating to international operations,
permits, licenses, financings, approvals and other contingencies in
connection with growth in new or existing jurisdictions and
additional risks and uncertainties described in the Company's Form
10-K, Form 10-Q and Form 8-K reports (including all amendments to
those reports). In providing forward-looking statements, the
Company is not undertaking any duty or obligation to update these
statements publicly as a result of new information, future events
or otherwise, except as required by law. If the Company updates one
or more forward-looking statements, no inference should be drawn
that it will make additional updates with respect to those other
forward-looking statements.
Non-GAAP Financial Measures
This press release
includes Adjusted Property EBITDAR for Gold Strike Tunica, which is
a "non-GAAP financial measure" as defined in Regulation G under the
Securities Exchange Act of 1934, as amended. Schedules that
reconcile the non-GAAP financial measure for 2019 to the most
directly comparable financial measure calculated and presented in
accordance with Generally Accepted Accounting Principles in
the United States are available in
the Company's earnings release, dated February 12, 2020, that was furnished with the
SEC and is available on our website at www.mgmresorts.com. In
addition, this press release includes a multiple based on average
Adjusted Property EBITDA. Adjusted Property EBITDA is Adjusted
Property EBITDAR less rent of $40
million. For a reconciliation of 2021 Adjusted Property
EBITDAR to net income see footnote 1 to this press release.
MGM RESORTS CONTACTS
Investment Community:
ANDREW
CHAPMAN, Director of Investor Relations
(702) 693-8711, achapman@mgmresorts.com
News Media:
BRIAN
AHERN, Executive Director of Communications
media@mgmresorts.com
1 Calculated
as net income of $81.1 million, adjusted for $0.4 million of
interest and other non-operating expense, $8.0 million of
depreciation and amortization, $0.1 million of property
transactions, net, and $25.4 million of rent expense associated
with triple-net operating leases.
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SOURCE MGM Resorts International