Purchase price represents an approximate 11 times multiple on average Adjusted Property EBITDA from 2019-2021
LAS VEGAS, June 9, 2022 /PRNewswire/ — MGM Resorts International (NYSE: MGM) (“MGM Resorts” or the “Company”) today announced that it has reached an agreement to sell the operations of Gold Strike Tunica (“Gold Strike”) to Cherokee Nation Entertainment Gaming Holdings, LLC (“CNE”), a subsidiary of Cherokee Nation Businesses, for $450 million in cash, subject to customary adjustments.
“I want to thank all of our Gold Strike employees who have consistently delivered world-class gaming and entertainment experiences to our guests,” said Bill Hornbuckle, CEO & President, MGM Resorts International. “Gold Strike is a wonderful property with a bright future ahead. Strategically, though, we decided to narrow our focus in Mississippi to a single resort – Beau Rivage – and dedicate more of our time and resources towards continuing to drive success at that leading, world-class resort and casino.”
For the twelve months ended December 31, 2021, Gold Strike reported net income of $81.1 million and Adjusted Property EBITDAR of $115 million1, reflecting benefits from certain market specific factors in the last year. Pre-pandemic, Gold Strike reported Adjusted Property EBITDAR of $67 million in 2019. At the closing of the transaction, MGM Resorts’ master lease agreement with VICI Properties Inc. (NYSE: VICI), which currently includes Gold Strike, will be amended to reduce annual rent by $40 million. The Company expects net cash proceeds after taxes and estimated fees to be approximately $350 million.
“This is a great outcome for the Company as we are able to reprioritize future capital expenditures toward opportunities that will enhance the customer experience at our other locations,” said Jonathan Halkyard, CFO & Treasurer, MGM Resorts International. “We appreciate VICI, as the real estate owner of Gold Strike, working constructively with CNE to facilitate a new lease agreement.”
Gold Strike opened in 1994 and was acquired by MGM Resorts in 2005. At 32 stories tall, the iconic property is one of the most recognizable buildings in Tunica and towers above all other structures. When it was built the gold tower was reported to be the tallest building in Mississippi.
The transaction is expected to close in the first half of 2023, subject to regulatory approvals and other customary closing conditions.
Weil, Gotshal & Manges LLP served as legal counsel to MGM Resorts.
About MGM Resorts International
MGM Resorts International (NYSE: MGM) is an S&P 500® global entertainment company with national and international locations featuring best-in-class hotels and casinos, state-of-the-art meetings and conference spaces, incredible live and theatrical entertainment experiences, and an extensive array of restaurant, nightlife and retail offerings. MGM Resorts creates immersive, iconic experiences through its suite of Las Vegas-inspired brands. The MGM Resorts portfolio encompasses 33 unique hotel and gaming destinations globally, including some of the most recognizable resort brands in the industry. The Company’s 50/50 venture, BetMGM, LLC, offers U.S. sports betting and online gaming through market-leading brands, including BetMGM and partypoker. The Company is currently pursuing targeted expansion in Asia through the integrated resort opportunity in Japan. Through its “Focused on What Matters: Embracing Humanity and Protecting the Planet” philosophy, MGM Resorts commits to creating a more sustainable future, while striving to make a bigger difference in the lives of its employees, guests, and in the communities where it operates. The global employees of MGM Resorts are proud of their company for being recognized as one of FORTUNE® Magazine’s World’s Most Admired Companies®. For more information, please visit us at www.mgmresorts.com. Please also connect with us @MGMResortsIntl on Twitter as well as Facebook and Instagram.
About Cherokee Nation Entertainment:
Cherokee Nation Entertainment is the gaming and hospitality company of the Cherokee Nation. The company owns and operates Hard Rock Hotel & Casino Tulsa and nine Cherokee Casinos, including a horse racing track, three resort hotels, three golf courses and other retail operations. For more information visit www.hardrockcasinotulsa.com and www.cherokeecasino.com.
Forward Looking Statements:
Statements in this release that are not historical facts are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and involve risks and/or uncertainties, including those described in the Company’s public filings with the Securities and Exchange Commission. Forward-looking statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “could,” “may,” “will,” “should,” “seeks,” “likely,” “intends,” “plans,” “pro forma,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. The Company has based forward-looking statements on management’s current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to, the Company’s expectations regarding the closing of the sale and any benefits expected to be received from the sale, including the Company’s expected net cash proceeds. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise, and the Company may not be able to realize them. The Company does not guarantee that the transaction or other events described herein will happen as described (or that they will happen at all). These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include risks related to the Company’s ability to complete the transaction on the terms described herein or all, the satisfaction of the closing conditions, including the receipt of regulatory approvals, to which the completion of the transaction is subject, which could delay or prevent the completion of the transaction, the continued impact of the COVID-19 pandemic on the Company’s business, the effects of economic conditions and market conditions in the markets in which the Company operates and competition with other destination travel locations throughout the United States and the world, the design, timing and costs of expansion projects, risks relating to international operations, permits, licenses, financings, approvals and other contingencies in connection with growth in new or existing jurisdictions and additional risks and uncertainties described in the Company’s Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those other forward-looking statements.
Non-GAAP Financial Measures
This press release includes Adjusted Property EBITDAR for Gold Strike Tunica, which is a “non-GAAP financial measure” as defined in Regulation G under the Securities Exchange Act of 1934, as amended. Schedules that reconcile the non-GAAP financial measure for 2019 to the most directly comparable financial measure calculated and presented in accordance with Generally Accepted Accounting Principles in the United States are available in the Company’s earnings release, dated February 12, 2020, that was furnished with the SEC and is available on our website at www.mgmresorts.com. In addition, this press release includes a multiple based on average Adjusted Property EBITDA. Adjusted Property EBITDA is Adjusted Property EBITDAR less rent of $40 million. For a reconciliation of 2021 Adjusted Property EBITDAR to net income see footnote 1 to this press release.
SOURCE MGM Resorts International