Churchill Downs Incorporated (“CDI” or the “Company”) announced that it has terminated its definitive purchase agreement to acquire substantially all of the assets and properties used in connection with the operation of Lady Luck Casino in Vicksburg, Mississippi ( the “Lady Luck Vicksburg Transaction”) and amended its previously announced definitive purchase agreement (the “Amendment”) to acquire substantially all of the assets and properties used in connection with Presque Isle Downs & Casino in Erie, Pennsylvania (the “Presque Isle Transaction”) from Eldorado Resorts, Inc. (“ERI”) (Nasdaq: ERI). Pursuant to a Termination Agreement and Release, dated as of July 6, 2018, by and among CDI, ERI and certain subsidiaries of ERI (the “Termination Agreement”), CDI has agreed to pay to ERI a termination fee of $5.0 million, subject to the parties' execution of a definitive agreement with respect to the Lady Luck Nemacolin Transaction, as described below.
As previously disclosed, on February 28, 2018, CDI announced that it had entered into two separate definitive asset purchase agreements with ERI and certain of its subsidiaries to effectuate the Presque Isle Transaction and Lady Luck Vicksburg Transaction for total aggregate consideration of approximately $229.5 million, to be paid in cash, subject to certain working capital and other purchase price adjustments.
Also as previously disclosed, on May 7, 2018, CDI and ERI each received a request for additional information and documentary material (a “Second Request”) pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), from the Federal Trade Commission (the “FTC”) in connection with the FTC's review of the pending Lady Luck Vicksburg Transaction. Following receipt of, and consideration of the time and expense needed to reply to, the Second Request, pursuant to the Termination Agreement, CDI and ERI mutually agreed to terminate their respective rights and obligations with respect to the Lady Luck Vicksburg Transaction.
Concurrently with the entry into the Termination Agreement, CDI and ERI also entered into the Amendment, pursuant to which CDI and ERI have agreed to, among other things: (i) eliminate the consummation of the Lady Luck Vicksburg Transaction as a condition to closing the Presque Isle Transaction, (ii) withdraw the parties' filings previously submitted in connection with the HSR Act and submit new filings pursuant to the HSR Act to reflect the transactions contemplated by the Amendment and the Termination Agreement and, (iii) cooperate in good faith, subject to certain conditions, to enter into an agreement pursuant to which CDI will assume the rights and obligations of an affiliate of ERI to operate the Lady Luck Casino Nemacolin in Farmington, Pennsylvania for cash consideration of $100,000 (the “Lady Luck Nemacolin Transaction”). The Presque Isle Transaction reflects a stand-alone purchase price of $178.9 million subject to certain working capital and other purchase price adjustments and remains dependent on usual and customary closing conditions. Closing of the Presque Isle Transaction is also conditioned on the execution of the definitive agreement with respect to the Lady Luck Nemacolin Transaction.
CDI and ERI believe they will be able to work expeditiously to complete the HSR review and promptly obtain the expiration (or termination) of the statutory waiting period for the Presque Isle and Lady Luck Nemacolin transactions pursuant to new filings under the HSR Act. Subject to expiration of termination of the waiting period under the HSR Act, receipt of Pennsylvania regulatory approvals, and other customary closing conditions, CDI and ERI expect the Presque Isle and Lady Luck Nemacolin transactions to close in the fourth quarter of 2018.
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