- Flexi Group
Century Casinos completes 50% ownership deal for Nugget Casino Resort's property firm
Century Casinos announced Friday it has completed its previously announced acquisition of 50% of the membership interests in Smooth Bourbon from Marnell Gaming for $95 million, as part of its agreement to acquire Nugget Casino Resort in Sparks, near Reno in Nevada. This will become its tenth casino in North America.
Smooth Bourbon owns the land and building underlying the Nugget Casino Resort, and has entered into a lease with Nugget Sparks, which operates the resort for an annual rent of $15 million. Century Casinos will now receive $1.9 million per quarter (before any expense pursuant to the lease) for its share of the rent from Nugget Sparks.
The company entered into a Membership Interest Purchase Agreement with the seller in February 2022 to acquire the Smooth Bourbon membership interests and to purchase 100% of the membership interests in Nugget Sparks. The purchase of the latter is expected to occur within one year and is subject to approval by the Nevada Gaming Commission.
Following this second closing, the company will own the operating assets of the casino and 50% of the membership interests in Smooth Bourbon. The company also has a five-year option to acquire the remaining 50% of the membership interests in the Smooth Bourbon for $105 million plus 2% per annum.
The company financed the acquisition with a new credit facility that was issued by Goldman Sachs Bank USA on the closing date. The credit facility also refinanced the company’s existing debt and will finance the purchase of Nugget Sparks. The acquisition of the Nugget is expected to “meaningfully enhance the company’s free cash flow as well as be immediately accretive to earnings”, Century Casinos stated.
Back when the acquisition was first announced, Erwin Haitzmann and Peter Hoetzinger, Co-Chief Executive Officers of Century Casinos spoke in a press release and said: “We have been looking at entering the Reno market for a long time, and we believe the Nugget is a perfect fit for our portfolio. We look forward to welcoming the great team at the Nugget to Century Casinos. We believe there is a lot of upside to this transaction and that we identified some areas of improvement to continue the Nugget’s growth. We expect the Nugget to seamlessly integrate and provide added synergies for Century Casinos’ US portfolio”.
Located in Sparks, Nevada, Nugget Casino Resort is a full-service resort that includes a large gaming floor, two hotel towers, 110,000 square feet of convention space, a 8,555 seat outdoor amphitheater, a wide variety of casual and fine dining options in addition to several on-site bars and lounges, and a 5-story 1,200 space parking garage and additional 1,272 parking spaces.
The property consists of 50,200 square feet of casino space, 859 slot machines, 29 table games, 1,382 hotel rooms and seven dining venues. The Nugget Casino resort had net operating revenue of $100.4 million and Adjusted EBITDA of $32.8 million for the year ended December 31, 2021.
The news of these acquisitions came at the heels of Century Casinos’s subsidiary Century Resorts Alberta entering into a definitive agreement to sell land and building in Calgary to Rowanwood Financial Properties, in a deal valued at CAD 8.1 million ($6.5 million). Century Resorts Alberta sold the casino operations of Century Casino Calgary in December 2020, and leased the portion of the property containing the casino premises to the purchaser. Calgary accounted for 7% of Century Casinos’ net operating revenue in 2020, prior to the sale.