Ameristar buys stock, ends plan to sell casino
Published 11:57 am Monday, February 28, 2011
Ameristar Casino’s parent company announced today that it has entered into a binding agreement to purchase about 26 million shares of common stock held by the estate of former owner Craig H. Neilsen, heading off the possible sale of the company.
The $457.6 million transaction, at $17.50 per share, will be financed by $2.1 billion in debt financing, according to the company’s statement. The borrowing also will be used to refinance about $1.5 billion in existing debt and provide additional working capital.
A possible sale had been suggested in 2010.
The stock re-purchase provides an infusion of cash into an organization that funds research and charitable work for patients with spinal cord injuries.
Ray Neilsen, son of the late owner and co-executor of his estate, said the transaction was made with “great confidence” in Ameristar’s operations and long-term growth potential.
“The decision to sell a significant portion of the Neilsen estate’s Ameristar shares in the near term is based on the unique financial needs of the estate and its beneficiaries, including The Craig H. Neilsen Foundation that my father established as his legacy to support spinal care research and treatment.”
The deal is expected to close during the second quarter, subject to financing, receipt of gaming approvals and other closing conditions.
No impact will be felt at the local level for employees or gaming patrons, a spokesman for the company said today. “We are focusing on serving our guests as usual,” he said.
Bess Averett, public relations manager for the Vicksburg Ameristar operation, declined to comment.
Ameristar’s chief financial officer, Thomas Steinbauer, said, “We believe this transaction will meaningfully benefit Ameristar stockholders in that it is an excellent opportunity to acquire a substantial portion of the shares of a significant stockholder on an efficient and favorable basis to the company, especially given the current conditions in the credit market.”
He also noted the re-purchase allows the company to re-finance debt and provides some financial flexibility for growth.
The shares represent about 45 percent of Ameristar’s outstanding shares. The Neilsen estate will retain ownership of about 17 percent of the company’s outstanding stock.
In trading this morning, shares were hovering near the $17.50 mark, with highs at $17.98 and lows at $17.19.
Vicksburg’s Ameristar Casino is the area’s largest of the five gaming ventures in the city, employing 758 people in its casino, hotel, gift shop and RV park, according to third-quarter 2010 data supplied to the Mississippi Gaming Commission.
In August, directors had announced they were considering selling the company as income was falling due to the depressed economy. Earlier this month, financial statements showed a second consecutive quarter of revenue growth and the second highest fourth-quarter net revenue achieved in company history, with consolidated net revenues improving year over year by $2.8 million, to $294.1 million.
For the full year, consolidated net income improved from a loss of $4.7 million in 2009 to net income of $8.6 million in 2010, the company reported.
Ameristar Vicksburg reported fourth-quarter operating income declined in 2010 to $7.1 million from $7.5 million in 2009, but increased for the year to $33.5 million from $32.9 million in 2009.
Ameristar was founded in 1954 in Jackpot, Nev. and operates casinos in, along with Vicksburg, St. Charles, Mo., East Chicago, Kansas City, Council Bluffs, Neb., Denver and Jackpot.
The Craig H. Neilsen Foundation was established in 2003 for the purpose of awarding grants to a broad spectrum of charities benefiting spinal cord injury research and rehabilitation.