Churchill Adds Maine Casino to Portfolio

Churchill Downs Inc. announced it has entered into a definitive purchase agreement to acquire Oxford Casino in Oxford, Maine, for total consideration of approximately $160 million to be paid in cash. 
 
The transaction, which the racetrack and gaming company said is dependent upon the company securing a gaming license from the Maine Gaming Control Board and other closing conditions, is anticipated to close in the fourth quarter of 2013. If certain closing conditions are not satisfied, the company could be obligated to pay an $8 million termination fee, a CDI release said.
 
The property opened in June 2012 and completed an expansion of its gaming floor in early October 2012; thus, only limited actual financial data is available, according to Churchill Downs Inc.

"Based on the company's projections and the Oxford management team's budget, the company expects that at closing the transaction price will represent a multiple of approximately 7 1/2 times the property's then-trailing 12-month EBITDA (earnings before interest, taxes, depreciation, and amortization)," CDI said in a statement. "The transaction is expected to be immediately accretive to earnings per share and provide annual free cash flow of approximately $12.5 million."
 
CDI said the transaction will be funded through the company's existing credit facility. "While the acquisition is an equity transaction, for tax purposes it will be treated as an asset transaction which the company expects will provide tax benefits that will effectively reduce the transaction price multiple," the release said.
 
"The acquisition of Oxford continues our focus on investing capital in gaming-friendly states, in newer properties, in what we believe are competitively defensible markets, and at valuations that we believe will result in significant future free cash flow generation at rates of return attractive to our shareholders," CDI chairman and CEO Robert L. Evans said in a statement. "The Oxford team of over 400 employees has done an exceptional job and we look forward to welcoming them into the Churchill Downs family."
 
The property, located on 100 acres about 40 minutes northwest of Portland, Maine, is owned by Black Bear Realty Co., LLC.

It consists of a 25,000-square-foot single-level gaming floor with 790 class III slot machines and 22 table games, as well as dining facilities.