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Similar to Union gaming south central 2010
Similar to Union gaming south central 2010 (20)
Union gaming south central 2010
- 4. 4
Upside in an Economic Recovery
⢠Gaming facilities are largely fixedâcost operations and have significant negativeÂ
operating leverage in a recessionary environmentâŚ
⢠Revenues might be down 10â20%, but profits decline 20â40%
⢠âŚbut 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 additionalÂ
liquidity
- 7. 7
GGK â 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
Preâopening 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
GGK â 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
GGKÂ â Liquidity
⢠GGK has ample current liquidity to finance the cash equity portion of Phase 1, inÂ
addition to financing other commitments outside of Kansas (e.g. maintenanceÂ
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 absorbÂ
potential cost overruns
⢠We also believe GGK, between a combination of cash on hand, debt financing,Â
and cash generated from operations (both WinSpirit and existing assets) couldÂ
finance a Phase 2 build (this assumes an improved economic environment)
- 11. 11
PGP â 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
GGK â Financing Sources (A)
⢠PGP intends to finance Kansas Star via a mix of cash equity (35.0%), debt (51.5%) andÂ
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
GGK â Financing Sources (B)
⢠We conservatively assume that PGP does not use a 3rd party developer and incursÂ
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; $35.0mm debt
Financing sources Ratio
Cash equity 40.5%
Debt 59.5%
Financing amounts Phase 1 Phase 2 Total
Cash equity 91,310,639 23,806,164 115,116,802
Debt 134,357,082 35,029,069 169,386,152
Total Peninsula 225,667,721 58,835,233 284,502,954
- 14. 14
PGP â Liquidity Phase 1
⢠Via a combination of sources, including debt financing commitments, PGP hasÂ
ample current liquidity to finance the cash equity and debt portions of Phase 1,Â
in addition to financing other commitments outside of Kansas (e.g. maintenanceÂ
capital expenditures at existing gaming facilities)
With 3rd party Without 3rd party
hotel developer hotel developer
Item As of 9/30/10 As of 9/30/10
Cash ($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 addâon 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
PGP â Liquidity Phase 2
⢠We believe PGP will generate a significant amount of cash from its existingÂ
operations and Kansas Star Casino, which along with debt financing, should resultÂ
in ample liquidity to finance a Phase 2 development. However, we note that thisÂ
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
PGP â Balance Sheet
⢠PGPâs proâforma leverage was 5.2x as of 6/30/2010
⢠A high leverage ratio would suggest that a company might have too much debtÂ
relative to the cash flows it generates
⢠In the case of PGP, we believe that its leverage ratio is such that the company is inÂ
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