Privately-held Jacobs Entertainment and affiliates now own 15.6% of all shares in MTR Gaming, which includes in its portfolio two Thoroughbred racinos - Mountaineer Racetrack & Casino in West Virginia, and Presque Isle Downs, which opened last year in Pennsylvania - according to documents filed with the Securities and Exchange Commission.
A trust associated with company co-founder Richard E. Jacobs is the largest individual shareholder with nearly two million shares of MTR Gaming, including more than 700,000 purchased in March alone.
But despite paying about $41.8 million for nearly 4.3 million shares of MTR Gaming by the Jacobs family and affiliates since 2006, Jacobs Entertainment president Stephen R. Roark said there wasn’t much he could add to what has been publicly declared.
“Affiliates of ours … have detailed recent acquisitions, and other than that, I can only comment that we continue to pursue options and review the company’s performance,” Roark said during a March 28 conference call discussing the company's 2007 financial performance.
In its initial statement of ownership filing with the Securities and Exchange Commission in November 2006, Jacobs Entertainment said it had acquired MTR Gaming stock to “suggest or take a position with respect to potential changes in the operations” including potential transactions that could include “disposing of one or more businesses” and “selling the issuer or acquiring another company or business,” among other several other options.
Jacobs Entertainment, which has owned all or part of Colonial Downs since about 1997, in January announced it intended to put the racetrack located in New Kent, Va., on the market to “reposition its racetrack portfolio,” aiming to include only racetrack facilities with multiple gaming such as slots and poker.
In making the announcement, Jacobs Entertainment acknowledged itself as the largest shareholder in MTR Gaming and the company's chief executive officer, Jeff Jacobs, said, "We recognize the macro trends and what is necessary to bring about growth in this industry."
But Roark in a March 28 telephone interview said any potential sale of Colonial Downs and nine related off-track wagering outlets was on hold for now, and the company’s operation of the track was “business as usual.”
“Right now we are getting ready for the (July 19) Virginia Derby (gr. II) and the 2008 meet,” Roark said of the 45-day meet scheduled to run June 9- Aug. 6. “I mean if somebody came in and said, I will give you ‘dollar-sign blank’ for the racetrack, we might entertain that. I mean, everything is for sale. But right now, it’s business as usual.”
Jacobs Entertainment, which also owns five total casino properties in Colorado and Nevada, as well as 19 truck plaza video gaming facilities in Louisiana, reported net income of $4.96 million for 2007, compared to a loss of $9.85 million in 2006. Pari-mutuel revenues rose 3.8% to $41.3 million in 2007, the company reported.
Separately, another large shareholder in MTR Gaming has submitted two independent nominees for the company's board of directors. Lantern Lane Capital Management, which said it owns about 660,000 shares of MTR Gaming, said the nominees would "add tremendous value and a fresh perspective" at a "crucial time for the company as it evaluates potential transactions ...or goes forward as an independent gaming company with the potential for much improved operational performance."
Calls for comment from MTR Gaming officials were not immediately returned. It has been reported that upwards to 200 unionized employees at Mountaineer are preparing to strike March 29. Shares of MTR Gaming closed March 28 trading at $7.03, down 1.7%.
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