Crown Casino and Cannery Casino
28-05-2009
CCR or Cannery Casino Resorts LLC just announced March 12, 2009 that the merger agreement it once had with Crown Limited has been terminated. This means that CCR will no longer be acquired by Crown Limited. Instead of the merger, it has now entered another agreement with Crown Limited where Crown will be investing $370 million into CCR. This amount is comprised of a cash fee worth $50 million and a non-voting investment right into CCR that is worth $320 million. Both amounts comprising the total if $370 million are subject to regulatory approvals as well.
The Effects of the Terminated Merger Agreement
The termination of the merger agreement actually places CCR in an extremely enviable position. This means that CCR would be in the position to do well in the industry, having a healthy balance sheet, new properties acquired all over Pennsylvania and Nevada, an abundance in liquidity, better growth opportunities, and a lot more certainty when it comes to employment. Furthermore, CCR also plans to continue its upheld tradition of excellence when it comes to the provision of service to the locale of both Pennsylvania and Nevada – and this is matched with the highest value of gaming experience ever.
Bill Wortman’s Take on the New Agreement
CCR’s co-CEO, Bill Wortman, has only positive things to say about the new agreement. Now that the company is placed in a better position, it would then be able to take advantage of the existing market conditions, using these to strengthen their brand and market all of their properties and assets. Wortman, along with his business partners, is excited about running the newly amended business, even growing it in conjunction with CCR’s partners from Oaktree Capital. Whatever future prospects Cannery might have in mind, all these are being looked forward to by Bill Wortman himself.
Stephen Kaplan’s Reaction to the New Agreement
Stephen Kaplan is one of Oaktree Capital’s Principals and is a significant and valuable investor in CCR as well. Just like Wortman, Kaplan is extremely happy with how the company is performing, in spite of the difficult economic conditions that are prevalent in the industry right now. Moreover, Kaplan is delighted at the fact that this generous investment from Crown is able to place CCR in a stronger financial position in the industry.
The Terms of the New Agreement Broken Down
A termination fee of $50 million and the amount worth $320 million will be invested into Non-Participating Units for Series B. These units have no coupons and they are not subject to any mandatory redemption either. In a separate part of the agreement, CCR has also decided to grant Crown a viable option to complete the purchase of CCR, and this option is viable over a 2-year period. Of course, the purchase has to be done according to the terms of the original merger agreement, as long as Crown is able to complete its licensing process. The process can take time because the licensing process has to undergo different jurisdictions. If regulatory approvals are not processed and received within a 60-day period, or a 90-day period, if CCR asks for an extension, then Crown will not be given the Non-Participating Units of Series B. Instead, Crown will have to pay CCR an additional fee amounting to $200 million, plus an investment worth $40 million, all for a 4.1$ stake that is non-voting in nature.
The Ownership of CCR
Millennium Gaming, Inc. owns 58% of CCR while the remaining 42% is owned by entities that are managed by Oaktree Capital. Interestingly, Millennium Gaming, Inc. is actually a joint venture comprised of Bill Wortman and Bill Paulos.
