As previously calculated, the total investment for a “new” President would likely be in the $50 million range. The President would draw from a new geographic area while Lumiere Place would certainly capture some or most of the President’s customers with no additional capacity. Assuming a combined $25m in additional EBITDA from the move, the incremental value of the President would be worth around 6x EBITDA less the investment, or a net of $100m.
A $1.67 in incremental value per share is not small change now with PNK trading at just $6.50 per share. Another potentially attractive option could also be pursued. A gaming license in a limited license jurisdiction like Missouri’s with no loss limit in place is surely worth $100 million. I don’t foresee any liquidity issues for PNK, but the sale of the license could alleviate any deteriorating financial condition.
PNK suddenly has some operating options in St. Louis and its financial situation is probably more flexible than it appears to the Street. Look for an in-depth discussion of this flexibility on the call tomorrow.