Twin River Worldwide Holdings boosted its relevance in the regional gaming sector with casino acquisitions Friday at bargain-basement prices.
For a combined $180 million, the Rhode Island-based casino operator landed in three new markets: the Atlantic City Boardwalk, northwest Louisiana, and Lake Tahoe. Twin River is also waiting to close on a deal announced last year to acquire casinos in Kansas City, Missouri, and Vicksburg, Mississippi.
Ten days ago, SunTrust Robinson gaming analyst Barry Jonas told investors Twin River had the balance sheet to “capitalize on distressed/opportunistic” acquisitions. But he didn’t expect to see the company pull the trigger on a deal so quickly.
Jonas called Friday’s announcements a “savvy move by management” and a way to grab an opportunity at “potential fire-sale prices in the current environment.”
Apparently, $25 million for Bally’s Atlantic City, a 1,200-room hotel-casino at the heart of the Boardwalk, was too good to pass up.
The Shreveport and Lake Tahoe acquisitions help regional rivals Eldorado Resorts and Caesars Entertainment clear Federal Trade Commission concerns in those markets as the companies look to close their 10-month-old $17.3 billion merger.
When Twin River’s five casino transactions close later this year and in early 2021, the company will have 12 gaming properties in eight states.
“It reaffirms our commitment to employees, customers, and the communities in which we operate… Twin River will be stronger than ever,” board chairman Soo Kim said in a statement Friday.
Eldorado Shreveport
The timing of Twin River’s deals comes with the backdrop of the COVID-19 coronavirus pandemic, which has closed casinos across 43 states since the middle of March. It’s unclear when casino gaming will return.
Jonas said Twin River has enough liquidity to last approximately 10 months with zero revenue, primarily because casino purchases won’t close for several months and the company isn’t currently responsible for maintaining the five properties. In March, Twin River said it “funded fully” its $250 million revolving credit facility and has more than $360 million on its balance sheet.
Twin River’s current portfolio includes three casinos and a non-casino racetrack in Colorado; Hard Rock Biloxi in Mississippi; Dover Downs Racetrack and Casino in Delaware; and two casinos in Rhode Island, Twin River and Tiverton.
“Our current models factor mid-June casino re-openings, and we expect better visibility – and likely more stability in the debt markets – as deal close approaches,” Jonas said.
Jonas, who upgraded Twin River on April 17 to a Buy rating, saw his prediction play out Friday in real time as shares of the company grew 18% on the New York Stock Exchange.
Stifel Financial gaming analyst Brad Boyer, who also follows Twin River, told investors Friday’s deals were typical for a company that has a history of “swimming against the current.” He added the deal could “create some level of apprehension” because of the timing, with COVID-19 closures hovering. However, the deals are taking place at prices that benefit Twin River.
Twin River’s previously announced purchase of Isle of Capri Kansas City and Lady Luck Vicksburg for $230 million from Eldorado Resorts is expected to close in June or July and helped FTC concerns over those markets.
Jonas didn’t believe the Bally’s Atlantic City purchase was done to satisfy the FTC, although regulators in Nevada, New Jersey, and Indiana still need to approve the Eldorado-Caesars merger.
“We think (the deal) had already cleared antitrust concerns in New Jersey, with the Bally divestiture more an opportunity to reduce exposure to a saturated market while the asset likely benefits from more attention and potential (capital expenditure) investment under Twin River ownership,” Jonas said.
MontBleu Lake Tahoe
In addition to the $25 million Twin River is paying to Caesars Entertainment and VICI Properties for Bally’s Atlantic City, the company will pay $155 million to Eldorado for the Eldorado Shreveport in Louisiana and the MontBleu Resort Casino in Lake Tahoe. The price for the operations of MontBleu was not disclosed.
Eldorado had previous deals in place to sell the casinos to Las Vegas-based Maverick Gaming. However, Maverick confirmed Friday that the closures of its current gaming portfolio due to the pandemic presented financing challenges.
Twin River stepped in with an offer for Shreveport that was $75 million below what Maverick had agreed to pay. As for MontBleu, the casino-hotel is leased from the Northern Nevada-based Edgewood Companies. Twin River struck a deal to extend the management agreement to 2035.
Jonas told investors on April 17 that Twin River was “well-positioned” for the post-pandemic re-openings “as their portfolio is more geared to high-frequency regional gamblers versus destination markets.”
He credited the company’s management, which is “accustomed to operating in high gaming tax jurisdictions via very efficient cost structures.”
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
