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The Newsroom - 2002 |
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IGT will sell casino its
operations in Colorado
Company says deal will let it focus on
core slot manufacturing businesses
December 27, 2002 - International Game Technology completed an agreement
Thursday to sell its Colorado casino operations for $84 million.
The company said the sale will let it focus on its core business of
manufacturing slot machines.
"We determined these assets were not a strategic fit with our core business,"
said IGT spokesman Ed Rogich.
Isle of Capri Black Hawk, a joint venture between Isle of Capri Casinos and
Nevada Gold & Casinos, will acquire the Colorado casino operations for
approximately 5.8 times the trailing 12 months EBITDA (earnings before interest,
taxes, depreciation and amortization), or cash flow, of the properties.
"The price is modestly higher than we would have expected, particularly given
the competitive nature of the Colorado market right now," Deutsche Bank
Securities analyst Marc Falcone said.
Isle of Capri still has to arrange financing and win approval for the deal from
the Colorado Gaming Commission.
"The sale will liquidate an asset we'd targeted to dispose of," Rogich said.
The Colorado casino operations of IGT include the Colorado Central Station
Casino in Black Hawk, and the Colorado Grande Casino in Cripple Creek.
IGT acquired the Colorado casinos as part of its $1.2 billion buyout of Anchor
Gaming at the end of 2001.
That deal gave the combined companies a total stock market value of $5.9
billion, creating the largest publicly traded company in Nevada and the largest
manufacturer of slot machines in the world.
The sale of the casinos includes the 20 percent interest owned by a third party
in the Colorado Grand Casino and is expected to close in the spring of 2003.
"The sale is largely in line with investors' expectations and a realization of
what they've talked about," said Joe Greff, spokesman for Global Fulcrum
Partners, Fulcrum Global Partners, an independent Wall Street broker. |
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IGT shares rose 40 cents, or 0.53 percent, Thursday to close at $75.30.
The sale will help IGT focus on the development of its core
business, supplying gaming devises, systems and related products for
casino customers, Rogich said.
"This year, IGT has been on a major upswing and we expect that to
continue in 2003 with the proliferation of gaming nationwide," said
Brian Gordon, spokesman for Applied Analysis, a Las Vegas-based
financial consulting company.
IGT is expected to enter new contracts over the next 12 months to 18
months to supply new products for facilities expected to come online
in the next two years to three years, he said.
"They are the market leader and we expect them to maintain that
position," Gordon said.
Rogich had no comment on how IGT would use the $84 million sale
price.
Wall Street analysts said the sale will add to IGT's free cash flow
in developing core business and reducing debt or repurchasing
shares.
When the deal closes, Isle Black Hawk plans to invest approximately
$75 million in Black Hawk to increase covered parking for both
properties, add additional casino space, hotel rooms, restaurants
and connect the properties by means of a skywalk that can service
both facilities.
Isle of Capri Casinos operates Isle of Capri Black Hawk, the largest
casino in Colorado, and will manage the added casino operations.
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