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Should be very accretive and acquisition EBITDA looks stable to growing

"Acquiring Peninsula Gaming is a transformative transaction that fits perfectly into our growth strategy by expanding our Company's scale, diversifying our platform, strengthening our financial profile, and generating meaningful value for our shareholders. The Peninsula properties are a strong fit for us, as they are well-managed and operate in resilient markets in the Midwest and South. We anticipate this transaction will be immediately accretive to earnings and significantly increase our free cash flow." -  Keith Smith, President and Chief Executive Officer of Boyd Gaming 


  • Since the properties are fairly new, there is minimal maintenance capex
  • Opportunity to grow revenues by introducing the B-Connected to the portfolio
  • The Iowa properties control more than 45% of the northern part of that market
  • The 2 Louisiana properties:
    • Their properties are halfway between Delta Downs and Treasure Chest.  
    • Most of the patrons are locals - so there is no overlap.
  • Kansas Star: only property serving the greater Witchita area.  Despite limited amenities, they are already generating $27MM of EBITDA in the first quarter operating out of a temp facility.
  • Post acquisition, 54% of their EBITDA will come from the Midwest and South assets vs. 35% today
  • They will refinance $1.2BN of Peninsula's debt, which includes paying for pre-payment fees on the existing debt


  • Is there any room for margin improvement at the assets they are acquiring?
    • Expect a benefit from B-Connected 
    • Opportunities on the centralized services side like purchasing
    • This deal is more about growth than synergies
  • Are comfortable with the pro-forma exposure to Louisiana since each of their properties is in a difference sub market
  • The $1.25BN of debt financing is inclusive of the seller note.  They are not ready to disclose the financing terms.
  • They will only be on the hook for funding Phase 3 of the Kansas Star development.  The permanent facility will be funded by the time it opens. They will see a decline in margins at Kansas Star once all the amenities open but total EBITDA should grow as they add incremental revenue.
  • Management fee from Peninsula gaming? There will be some form of management fee but they don't know how much.  
  • They are non-committal on how they will fund the $200MM of cash.  They don't need to raise equity but have the option. 
  • The deal will not require any amendment on their existing revolver
  • PNK's Baton Rouge impact on Evangeline Downs: 
    • The property is very stable
    • has been there a long time and given the local customer base
    • they do not expect to see a material impact from BR
  • How long will B-Connected take to implement?
    • About 6 months after closing
  • They are pretty comfortable that the competitive landscape will remain stable around Kansas Star.  BYD thinks that Peninsula has done a great job master planning the property.  For PH2, they see a lot of upside from the equestrian facility and hotel addition.
  • This deal will not preclude them from acquiring the balance of Borgata if it becomes available at the right price
  • The $10MM of corporate will likely stay in place.  The assets are run very well.
  • Rebranding is not on their radar screen at the moment
  • They are tendering for the bonds at T+50 but that's included in the cost
  • Unclear how much goodwill will be and how much of incremental D&A they will have.  The run rate number they have now may not be a bad number to use for now.  $50-55MM is likely a good run rate.
  • There could be some accounting for the earn out
  • Just the management fee will accrue to benefit BYD's covenants 
  • Legislative action is needed for more Kansas casino licenses.  There is potential of a tribal facility but it's not likely. 
  • There is some talk about electronic bingo in Minnesota, but don't expect any impact on them if that happens


  • BYD has entered into a definitive agreement to acquire Peninsula Gaming for total consideration of $1.45B
  • "The purchase price represents an EBITDA multiple of 7.0 times based on the trailing 12-month EBITDA of $109 million for Peninsula's Iowa and Louisiana properties, an annualized run-rate for Kansas Star based on its first-quarter 2012 EBITDA of $26.8 million, and corporate expense of $10 million."
  • Transaction is expected to close by year end
  • BYD has committed financing for the acquisition, which should be deleveraging.  Funding will consist of $200MM of cash, $1.1BN of new debt, and a $144MM note provided by the seller
  • If Kansas Star's 2016 EBITDA exceeds $105MM in 2016, BYD will make additional payments to the seller in the amount of 7.5x EBITDA in excess of $105MM
  • The acquisition will add 5 properties to BYD's portfolio
    • Kansas Star Casino near Wichita, Kansas 
    • Diamond Jo Casino in Dubuque, Iowa
    • Diamond Jo Worth in Northwood, Iowa
    • Evangeline Downs Racetrack & Casino in Opelousas, Louisiana
    • Amelia Belle Casino in Amelia, Louisiana