Union Gaming Analytics
Financial Suitability – South Central Zone
Fall 2010
2
Scope of Work
• Analyze the applicants for the South Central (Sumner County) license from a 
financial suitability persp...
3
Capital Markets Update
• Capital markets are generally “open for business” including for greenfield projects
• Two notab...
4
Upside in an Economic Recovery
• Gaming facilities are largely fixed‐cost operations and have significant negative 
oper...
5
Global Gaming Kansas, LLC
“GGK”
WinSpirit Casino
6
GGK – Project Ownership
Chicasaw 
Nation
100%
Global Gaming 
Solutions, LLC
100%
Global Gaming 
KS, LLC
7
GGK – Project Budget
Owner Ratio
Global Gaming Kansas, LLC ("GGK") 100%
Project budget: Phase 1 Phase 2 Total
Land 7,000...
8
GGK – Financing Sources
• GGK intends to finance WinSpirit via a mix of cash equity (48%) and debt (52%)
• Based on the ...
9
GGK – Liquidity
• GGK has ample current liquidity to finance the cash equity portion of Phase 1, in 
addition to financi...
10
Peninsula Gaming Partners, LLC
“PGP”
Kansas Star Casino
11
PGP – Project Budget
Owner Ratio
Peninsula Gaming Partners, LLC ("PGP") 100%
Project budget: Phase 1 Phase 2 Total
Land...
12
GGK – Financing Sources (A)
• PGP intends to finance Kansas Star via a mix of cash equity (35.0%), debt (51.5%) and 
co...
13
GGK – Financing Sources (B)
• We conservatively assume that PGP does not use a 3rd party developer and incurs 
100% of ...
14
PGP – Liquidity Phase 1
• Via a combination of sources, including debt financing commitments, PGP has 
ample current li...
15
PGP – Liquidity Phase 2
• We believe PGP will generate a significant amount of cash from its existing 
operations and K...
16
PGP – Balance Sheet
• PGP’s pro‐forma leverage was 5.2x as of 6/30/2010
• A high leverage ratio would suggest that a co...
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Union gaming south central 2010

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Union gaming south central 2010

  1. 1. Union Gaming Analytics Financial Suitability – South Central Zone Fall 2010
  2. 2. 2 Scope of Work • Analyze the applicants for the South Central (Sumner County) license from a  financial suitability perspective • Review of liquidity, commitments, cash flow and other metrics with respect to  the applicants’ ability to finance their proposed developments
  3. 3. 3 Capital Markets Update • Capital markets are generally “open for business” including for greenfield projects • Two notable greenfield gaming projects were recently financed (IL, MI) • Opportunistic rather than “rescue” financings for gaming companies • Many debt and equity transactions • Bally Technologies, Boyd Gaming, Harrah’s Entertainment, International  Game Technology, Melco‐Crown, MGM Resorts International, Pinnacle  Entertainment, Shuffle Master
  4. 4. 4 Upside in an Economic Recovery • Gaming facilities are largely fixed‐cost operations and have significant negative  operating leverage in a recessionary environment… • Revenues might be down 10‐20%, but profits decline 20‐40% • …but will have significant positive operating leverage in an economic recovery • Gaming facilities are operating leaner than ever • Incremental revenues do not require additional expenses (e.g. headcount) • Most incremental revenues will drop to the bottom line • Cash flows generated from operations grow nicely, providing additional  liquidity
  5. 5. 5 Global Gaming Kansas, LLC “GGK” WinSpirit Casino
  6. 6. 6 GGK – Project Ownership Chicasaw  Nation 100% Global Gaming  Solutions, LLC 100% Global Gaming  KS, LLC
  7. 7. 7 GGK – Project Budget Owner Ratio Global Gaming Kansas, LLC ("GGK") 100% Project budget: Phase 1 Phase 2 Total Land 7,000,000 na 7,000,000 Design, development and construction 138,000,000 106,000,000 244,000,000 Furniture, fixture and equipment 20,000,000 na 20,000,000 Pre‐opening 16,000,000 na 16,000,000 Privilege fee 25,000,000 na 25,000,000 Funds needed for development 206,000,000 106,000,000 312,000,000
  8. 8. 8 GGK – Financing Sources • GGK intends to finance WinSpirit via a mix of cash equity (48%) and debt (52%) • Based on the estimated budgets, this implies • Phase 1: $98.9mm cash equity; $107.1mm debt • Phase 2: $50.1mm cash equity; $55.1mm debt Financing sources Ratio Cash equity 48.0% Debt 52.0% Financing amounts Phase 1 Phase 2 Total Cash equity 98,880,000 50,880,000 149,760,000 Debt 107,120,000 55,120,000 162,240,000 Total GGK 206,000,000 106,000,000 312,000,000
  9. 9. 9 GGK – Liquidity • GGK has ample current liquidity to finance the cash equity portion of Phase 1, in  addition to financing other commitments outside of Kansas (e.g. maintenance  capital expenditures at existing gaming facilities) • GGK has also secured sufficient debt financing to cover the Phase 1 build • The combination of cash equity and debt would also be sufficient to absorb  potential cost overruns • We also believe GGK, between a combination of cash on hand, debt financing,  and cash generated from operations (both WinSpirit and existing assets) could  finance a Phase 2 build (this assumes an improved economic environment)
  10. 10. 10 Peninsula Gaming Partners, LLC “PGP” Kansas Star Casino
  11. 11. 11 PGP – Project Budget Owner Ratio Peninsula Gaming Partners, LLC ("PGP") 100% Project budget: Phase 1 Phase 2 Total Land 20,250,000 0 20,250,000 Design, development and construction 163,230,343 46,835,233 210,065,576 Furniture, fixture and equipment 42,187,378 12,000,000 54,187,378 Funds needed for development 225,667,721 58,835,233 284,502,954
  12. 12. 12 GGK – Financing Sources (A) • PGP intends to finance Kansas Star via a mix of cash equity (35.0%), debt (51.5%) and  contributions from a 3rd party hotel developer / operation (13.5%) • Based on the estimated budgets, this implies • Phase 1: $83.4mm cash equity; $122.7mm debt; $19.6mm 3rd party • Phase 2: $16.2mm cash equity; $23.9mm debt; $18.8mm 3rd party Financing sources Ratio Cash equity 35.0% Debt 51.5% 3rd party hotel 13.5% Financing amounts Phase 1 Phase 2 Total Cash equity 83,380,003 16,219,458 99,599,461 Debt 122,687,718 23,865,775 146,553,493 3rd party hotel 19,600,000 18,750,000 38,350,000 Total Peninsula (excluding 3rd party) 206,067,721 40,085,233 246,152,954 Total (including 3rd party) 225,667,721 58,835,233 284,502,954
  13. 13. 13 GGK – Financing Sources (B) • We conservatively assume that PGP does not use a 3rd party developer and incurs  100% of project costs. This suggests cash equity (40.5%) and debt (59.5%) • Based on the estimated budgets, this implies • Phase 1: $91.3mm cash equity; $134.4mm debt • Phase 2: $23.8mm cash equity; $35.0mm debt Financing sources Ratio Cash equity 40.5% Debt 59.5% Financing amounts Phase 1 Phase 2 Total Cash equity 91,310,639 23,806,164 115,116,802 Debt 134,357,082 35,029,069 169,386,152 Total Peninsula 225,667,721 58,835,233 284,502,954
  14. 14. 14 PGP – Liquidity Phase 1 • Via a combination of sources, including debt financing commitments, PGP has  ample current liquidity to finance the cash equity and debt portions of Phase 1,  in addition to financing other commitments outside of Kansas (e.g. maintenance  capital expenditures at existing gaming facilities) With 3rd party Without 3rd party hotel developer hotel developer Item As of 9/30/10 As of 9/30/10 Cash ($mm) 23,572,000 23,572,000 Credit facility (excess capacity) 56,800,000 56,800,000 Term loan (excess capacity) 65,929,000 65,929,000 Slot/Equipment financing 42,000,000 42,000,000 Senior notes add‐on 50,000,000 50,000,000 Total liquidity 238,301,000 238,301,000 Commitments Maintenance capex (2011, 2012) 18,000,000 18,000,000 Total commitments 18,000,000 18,000,000 Net liquidity 220,301,000 220,301,000 Plus free cash flow (2011, 2012) 66,000,000 66,000,000 Net liquidity plus free cash flow (2011, 2012) 286,301,000 286,301,000 Phase 1 development cost 206,067,721 225,667,721 Liquidity cushion 80,233,279 60,633,279
  15. 15. 15 PGP – Liquidity Phase 2 • We believe PGP will generate a significant amount of cash from its existing  operations and Kansas Star Casino, which along with debt financing, should result  in ample liquidity to finance a Phase 2 development. However, we note that this  assumes debt maturities in the 2015 timeframe are resolved efficiently. With 3rd party Without 3rd party hotel developer hotel developer Item 12/31/2012 12/31/2012 Cash and equivalents ($mm) 80,233,279 60,633,279 Commitments Assumes all debt maturities are refinanced 0 0 Maintenance capex existing assets (2013, 2014, 2015) 27,000,000 27,000,000 Maintenance capex KSC (2013, 2014, 2015) 15,000,000 15,000,000 Total commitments 42,000,000 42,000,000 Net liquidity 38,233,279 18,633,279 Plus free cash flow (2013, 2014, 2015) 135,000,000 135,000,000 Net liquidity plus free cash flow (2013, 2014, 2015) 173,233,279 153,633,279 Phase 2 development cost 40,085,233 58,835,233 Liquidity cushion 133,148,046 94,798,046
  16. 16. 16 PGP – Balance Sheet • PGP’s pro‐forma leverage was 5.2x as of 6/30/2010 • A high leverage ratio would suggest that a company might have too much debt  relative to the cash flows it generates • In the case of PGP, we believe that its leverage ratio is such that the company is in  a good financial position and is unlikely to default on its debt PGP* Ameristar Boyd Harrah's Isle of Capri MGM Penn Nat'l Pinnacle 5.2x 4.6x 6.8x 10.9x 7.3x 9.3x 3.0x 4.4x * company data as of 6/30/2010 ** all other data as of 9/30/2010 and Union Gaming estimates

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