Cannery and Crown terminate merger agreement
March 16, 2009
Cannery Casino Resorts announced that it has entered into an agreement with Crown Limited under which CCR will receive $370 million from Crown, which will consist of a $50 million cash fee and a $320 million non-voting investment in CCR, subject to appropriate regulatory approvals.
The agreement terminates the previously announced Cannery purchase agreement whereby CCR was to be acquired by Crown.
"Today's announcement puts CCR in an enviable position in the gamingindustry with a strong balance sheet, ample liquidity, exciting newproperties in Nevada and Pennsylvania, great growth opportunities and more certainty for our employees. CCR will continue its tradition of excellence in serving local customers in Nevada and Pennsylvania with the highest value gaming experience," said CCR's co-CEO Bill Paulos.
“We are well positioned to take advantage of market conditions to growour brand and aggressively market our properties," said Mr. Bill Wortman, CCR's co-CEO. "My business partner and I look forward to running and growing our business in conjunction with our financial partners at Oaktree Capital, and we are truly excited about Cannery's future prospects in this time of dramatic change in the gaming industry."
Stephen Kaplan, a principal at Oaktree Capital, a significant investorin CCR, said, "I am pleased with our company's relative performance in a difficult economic environment and am delighted that Crown's investment puts CCR in a strong a financial position."
Under the terms of the agreement, CCR will receive a $50 milliontermination fee and a $320 million investment into Series BNon-Participating Units, which have no coupon and are not subject tomandatory redemption.
Separately, as part of the agreement, CCR has granted Crown an optionfor two years to complete its purchase on terms consistent with theoriginal merger agreement if Crown successfully completes its licensingprocess in the applicable jurisdictions.
In the event regulatory approvals for the investment are not receivedwithin 60 days (or 90 days if CCR elects to extend the period), Crown will not be issued with the Series B Non-Participating Units. Instead, an additional fee of $200 million will be paid to CCR from the escrow, and Crown will invest $40 million into CCR for a 4.1% non-voting stake.
CCR is owned by Millennium Gaming, Inc. (58 percent), which is a joint venture between Bill Paulos and Bill Wortman, and entities managed by Oaktree Capital Management, L.P. through affiliates (42 percent).
Reacting the announcement, the Pennsylvania Gaming Control Board issued the following statement:
“The Gaming Control Board has received notice of the dissolution of theCrown Limited acquisition of Cannery Casino and Resorts, including theMeadows Racetrack and Casino in Washington County, Pennsylvania. Based upon the information received from the licensee, we do not anticipate that there will be any interruption in the operations of the Meadows Racetrack and Casino or in the upcoming opening of its permanent facility in April.
"The Board's staff will monitor and review the documentation of thetransaction to determine if any further regulatory action will berequired."
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