Churchill Downs Inc (CDI) has announced that it has pulled out of a deal to purchase a property from Eldorado Resorts Inc (ERI),whilst amending the purchase agreement related to a separate acquisition.
Earlier this year CDI agree to acquire the Lady Luck Casino in Vicksburg, Mississippi and Presque Isle Downs & Casino in Erie, Pennsylvania, for approximately $50.6m and $178.9m respectively.
Following federal intervention however the Mississippi portion is now off the table, with CDI agreeing to pay a $5m termination fee, as stipulated in the parties initial acquisition agreement.
The termination comes after a request for additional information and documentary material from the Federal Trade Commission (FTC), an independent agency of the US government, in relation to the Vicksburg transaction.
Wanting to ensure that the deal was in accordance with the Hart-Scott-Rodino Antitrust Improvements Act 1976, mutual agreement came after “consideration of the time and expense needed to reply”.
This has led to CDI agreeing a £100,000 fee to assume to rights of the Lady Luck Casino Nemacolin in Farmington, Pennsylvania, an ERI affiliate, with the closing of the Presque Isle Downs conditioned to this transaction.
In its statement CDI explained: “Concurrently with the entry into the Termination Agreement, CDI and ERI also entered into the Amendment, pursuant to which CDI and ERI have agreed to, among other things: (i) eliminate the consummation of the Lady Luck Vicksburg Transaction as a condition to closing the Presque Isle Transaction, (ii) withdraw the parties’ filings previously submitted in connection with the HSR Act and submit new filings pursuant to the HSR Act to reflect the transactions contemplated by the Amendment and the Termination Agreement and, (iii) cooperate in good faith, subject to certain conditions, to enter into an agreement pursuant to which CDI will assume the rights and obligations of an affiliate of ERI to operate the Lady Luck Casino Nemacolin in Farmington, Pennsylvania for cash consideration of $100,000.
“The Presque Isle Transaction reflects a stand-alone purchase price of $178.9 million subject to certain working capital and other purchase price adjustments and remains dependent on usual and customary closing conditions.
“Closing of the Presque Isle Transaction is also conditioned on the execution of the definitive agreement with respect to the Lady Luck Nemacolin Transaction.
“CDI and ERI believe they will be able to work expeditiously to complete the HSR review and promptly obtain the expiration (or termination) of the statutory waiting period for the Presque Isle and Lady Luck Nemacolin transactions pursuant to new filings under the HSR Act.
“Subject to expiration of termination of the waiting period under the HSR Act, receipt of Pennsylvania regulatory approvals, and other customary closing conditions, CDI and ERI expect the Presque Isle and Lady Luck Nemacolin transactions to close in the fourth quarter of 2018.”