MGM Resorts International has confirmed the closure of its sale of Gold Strike Tunica to CNE Gaming, a Cherokee Nation Business subsidiary, for a deal worth $450m.
Originally agreed in June 2022, the deal will be paid in cash and represents 11x Gold Strike’s average adjusted EBITDA from 2019-2021.
The Mississippi-based property is now in full control of the Cherokee Nation Business, joining its portfolio of casinos which also includes Hard Rock Tulsa, Legends Resort and Casino Arkansas and Cherokee Casino.
“Gold Strike is an iconic property in Mississippi, and the employees there represent southern hospitality at its finest,” said Bill Hornbuckle, CEO & President, MGM Resorts International. “I wish Gold Strike well, and firmly believe a bright future is ahead for this property.”
Following the end of 2022, Gold Strike reported net income of $47m and an adjusted EBITDAR of $98m. MGM has said that it will use the proceeds of the sale, which with post-tax and fees is estimated to be $350m, to improve the outlook of its balance sheet and reduce its debt.
“We plan to use the proceeds from this transaction to further fortify our balance sheet, deploy capital to growth opportunities, and return capital to shareholders,” added Jonathan Halkyard, CFO & Treasurer, MGM Resorts International.
Following the closure of the deal, CNE Gaming Holdings has entered into a triple net lease agreement with VICI Properties for the property.
The deal ensures that CNE pays an annual rental fee of $40m for an initial term of 25 years, with three further 10-year tenant renewal options.
Also connected with the deal VICI confirmed that MGM’s master rent payment per year has been reduced by $40m to $730m, now that Gold Strike is no longer under its control.
John Payne, President and Chief Operating Officer of VICI Properties, said, “We are excited to partner with Cherokee Nation Businesses in Tunica and look forward to supporting the team as they grow their gaming and hospitality businesses.”