view counter
 
view counter
 
 

Ont. East Gaming Bundle Deal Official

Published: January 12, 2016 4:03 pm ET

No Comments | Jump to Comments

On Tuesday, January 12 it was announced by the Great Canadian Gaming Corp. and the Ontario Lottery and Gaming Corp. that the ‘Ontario Gaming East Limited Partnership’ has completed its previously announced acquisition of the OLG's ‘Gaming Bundle 2’ (which is also known as the ‘East Gaming Bundle’). The OLG and the partnership has also signed a 20-year Casino Operating and Services Agreement.

The existing gaming properties acquired within the East Gaming Bundle consist of Shorelines Casino Thousand Islands (formerly OLG Casino Thousand Islands), Shorelines Slots at Kawartha Downs (formerly OLG Slots at Kawartha Downs), and a proposed gaming property in the community of Belleville.

"Over the last four months, we have worked very closely with OLG to ensure that the transition process is complete and successful for all stakeholders. We are excited about delivering great entertainment amenities and memorable experiences to our guests, welcoming our new colleagues, and becoming an active community participant in the Eastern Ontario region," said Andy LaCroix, Executive Director, Ontario Operations, Ontario Gaming East LP.

Releases from Great Canadian and OLG regarding the deals appear below.


Great Canadian Gaming Completes Acquisition of First Casino Bundle in Ontario Gaming Modernization Process


Great Canadian Gaming Corporation [TSX:GC] ("Great Canadian" or "the Company") announced today that Ontario Gaming East Limited Partnership ("Ontario Gaming East LP" or "the Partnership"), a partnership in which the Company now owns a 90.5% share, completed its previously announced (September 9, 2015) acquisition of Ontario Lottery and Gaming Corporation's ("OLG's") Gaming Bundle 2 (East) (the "East Gaming Bundle") for a purchase price of $51.3 million including certain gaming assets, working capital of approximately $12.3 million, and applicable taxes arising from the transaction. The existing gaming properties acquired within the East Gaming Bundle consist of Shorelines Casino Thousand Islands (formerly OLG Casino Thousand Islands), Shorelines Slots at Kawartha Downs (formerly OLG Slots at Kawartha Downs), and a proposed gaming property in the community of Belleville.

With the acquisition complete, the Partnership signed a 20-year casino operating and services agreement ("COSA") with OLG, which is also renewable at OLG's option for additional consecutive terms of 10 years each. Under the COSA, the Partnership will provide OLG a pre-established, guaranteed annual gaming revenue threshold amount plus 30% of gross gaming revenue above the pre-established gaming revenue threshold for each year. The Partnership will receive an annual service provider fee comprised of (i) a guaranteed base fixed fee component (which will be approximately $15 million per year before the Belleville facility is opened, increasing to $24 million per year thereafter), (ii) a variable component equal to 70% of gross gaming revenue above the applicable pre-established annual gaming revenue threshold retained by OLG, and (iii) a fixed amount for permitted capital expenditures. The Partnership will also retain all non-gaming revenues generated by the facilities including those from food and beverage and entertainment offerings.

During the twelve months ended September 30, 2015, the pro forma normalized EBITDA that Ontario Gaming East LP would have earned from operating the existing Thousand Islands Casino and Slots at Kawartha Downs, assuming both that the new COSA had then applied as well as an estimate for the Partnership's East Gaming Bundle management and administration expenses, is in the range of $16 to $17 million. These results, in addition to the guaranteed revenue payments owed to OLG, are expected to increase in the first quarter of 2017, when the new Belleville facility is expected to reach completion and are dependent on the realization of property development plans and revenue growth plans each of which may actually deviate from current expectations.

On completion of the acquisition from OLG, Ontario Gaming East LP had approximately $30 million in partner capital contributions and a $60 million revolving credit facility arranged on a non-recourse basis to Great Canadian and the minority partner's parent company. The acquisition was funded with $16.3 million of cash from partners' capital and $35 million of debt borrowed on the revolving credit facility. The Partnership also issued a $15 million letter of credit to OLG to secure performance under the COSA, which further reduced the available borrowing capacity on the revolving credit facility. In addition to both the cash from initial partner capital contributions remaining subsequent to the acquisition and the last $10 million of liquidity under the revolving credit facility, the partners expect to increase their capital contributions as the Partnership completes its development plans at each of its East Gaming Bundle properties.

Great Canadian will manage the property developments and operations of the Partnership through a facility development services agreement and a management services agreement. The Company will earn associated fees for providing these services.

"Over the last four months, we have worked very closely with OLG to ensure that the transition process is complete and successful for all stakeholders. We are excited about delivering great entertainment amenities and memorable experiences to our guests, welcoming our new colleagues, and becoming an active community participant in the Eastern Ontario region," said Andy LaCroix, Executive Director, Ontario Operations, Ontario Gaming East LP.

"Great Canadian is pleased to now own 90.5% of its Ontario Gaming East LP subsidiary, an increase from the previous 50.1% share it held," said Rod N. Baker, the Company's President and Chief Executive Officer. "We were already managing the day-to-day operations and property development plans of our subsidiary, so this was a great opportunity to increase our economic interest in an already exciting investment opportunity. The additional 40.4% of partnership units were obtained on the same economic terms as the Company invested for its original 50.1% share."

"It is an honour to be the first private sector owner and operator under OLG's Gaming Modernization Program," concluded Mr. Baker. "We thank OLG for this opportunity and are looking forward to future opportunities to collaborate with OLG through the ongoing modernization of gaming in the Province."


OLG signs 20-year Casino Operating and Services Agreement with Ontario Gaming East Limited Partnership for East Gaming Bundle assets


Ontario Lottery and Gaming Corporation (OLG) signs a 20-year Casino Operating and Services Agreement (COSA) with Ontario Gaming East Limited Partnership (Ontario Gaming East LP). Under the agreement, Ontario Gaming East LP takes over certain day-to-day operations and the assets of the East Gaming Bundle which include OLG Casino Thousand Islands and OLG Slots at Kawartha Downs, effective today.

On September 9, 2015, OLG announced it had selected Ontario Gaming East LP as the service provider for the East Gaming Bundle. Since then, OLG and Ontario Gaming East LP have been working towards concluding a Transition and Asset Purchase Agreement and entering into the COSA.

OLG has worked with Ontario Gaming East LP to help ensure that transferring employees have a smooth and seamless transition. This includes the requirement for Ontario Gaming East LP to retain transferring employees for a period of no less than 12 months in their current position and geographic location, and to provide eligible employees with benefits and a registered pension plan.

As the service provider for the East Gaming Bundle, Ontario Gaming East LP has the opportunity to build a new gaming and entertainment facility in Belleville.

At approximately $2 billion annually, OLG provides the Ontario government with its largest source of non-tax revenue. Modernization will help OLG provide more money to Ontario for key government services, including health care and education.



view counter
 
 
 

© 2020 Standardbred Canada. All rights reserved. Use of this site signifies your agreement and compliance with the legal disclaimer and privacy policy.

Firefox 3 Best with IE 7 Built with Drupal