Great Canadian Gaming Corporation (GCGC) announced Saturday that it has entered into letters of intent with the Ontario Lottery and Gaming Corporation (OLG) for the continuation of slot operations at each of the company's Georgian Downs and Flamboro Downs racetrack facilities.
The letters of intent set out the general intentions and business arrangements for the respective properties and proposed lease agreements with the OLG. The terms of definitive lease agreements are subject to approval by the Ontario Ministry of Finance. These lease arrangements will replace the current site holder agreements that will expire on March 31, 2013.
While the GCGC has had discussions with the Ontario Horse Racing Industry Transition Panel, it has not formalized transitional funding for continued racing operations at either Georgian Downs or Flamboro Downs. GCGC believes that securing lease agreements with the OLG will assist in further discussions with the Panel regarding transition funding for horse racing.
"We are extremely pleased to have reached this agreement in principle with Great Canadian for both their Flamboro and Georgian sites," said Rod Phillips, OLG's President and CEO. "We have a longstanding and positive relationship with Great Canadian and look forward to working with them in the future."
"We also are extremely pleased to have now concluded our negotiations with the OLG and look forward to continuing to work with them through these lease arrangements," stated Mr. Rod N. Baker, GCGC's President and Chief Executive Officer. "We also look forward to continuing our discussions with the Ontario government and the Panel with a view to finalizing arrangements and funding for horse racing to be able to continue at Flamboro Downs and Georgian Downs."
Until such time as the definitive lease agreements have been signed, further discussions with the Panel have occurred, and related horse racing transitional funding decisions have been made, the full effect of today's announcement on GCGC's properties' annual revenues and EBITDA will not be determinable. However, based on terms agreed to in the letters of intent with the OLG, GCGC continues to expect its Ontario properties' EBITDAs will decline as compared to the levels realized in 2012.
Once definitive lease agreements have been signed, GCGC will need to re-evaluate its assumptions used in the recent long-lived asset impairment tests for these properties. Based on the terms of the letters of intent, GCGC expects that it may need to record long-lived asset impairment reversals for Georgian Downs and Flamboro Downs.
(With files from GCGC)