Park Place Entertainment Corporation (NYSE: PPE) today announced an agreement that will enable it to trade its previously “locked up” equity investment in Jupiters Limited, a publicly held Australian gaming corporation. The agreement is subject to shareholder, regulatory and governmental approvals and financing arrangements by Jupiters.
As part of the agreement, Jupiters will repurchase approximately half of Park Place`s 20 percent equity stake in the company. Net proceeds of that sale are expected to be approximately US $50 million. Park Place has entered into a separate agreement to place its remaining equity shares in Jupiters with institutional investors. The placement and the Jupiters repurchase transaction are expected to settle simultaneously. Park Place will use the proceeds from both transactions to pay down bank debt.
Park Place will continue to manage two of Jupiters` Queensland casinos - Conrad Jupiters Gold Coast and Conrad International Treasury Casino-Brisbane.
Park Place`s equity investment in Jupiters consists of 48 million “founders” shares, which, under Jupiters` corporate charter and Queensland law, currently cannot be publicly traded.
Under the terms of the agreements referred to above:
* Jupiters will work to secure the Queensland government`s permission to “de-founder” Park Place`s shares, allowing them to be traded on the open market.
* Jupiters will repurchase approximately 50 percent of the Park Place equity stake.
* Park Place will place the balance of its Jupiters shares with institutional investors.
The purchase price for the Jupiters repurchase was set at US $2.36 (AUD $4.54) per share - a 5 percent discount off the volume weighted average price for the 90 calendar days preceding today`s announcement. The transactions are contingent on approvals by the Queensland government, gaming regulators and Jupiters shareholders, certain tax rulings and financing arrangements by Jupiters.
“This deal is a win for everyone—for Jupiters, Park Place and the shareholders of both companies,” said Park Place President and Chief Executive Officer Thomas E. Gallagher.
“We`re converting a previously illiquid investment into cash in a transaction that unlocks significant value for Park Place shareholders and gives Jupiters the freedom to expand its business. At the same time we will continue to offer Jupiters` patrons and shareholders the benefits of our unparalleled international experience in managing casinos on four continents,” Gallagher added.
Jupiters Chairman Lawrie Willett said, “While the founder regime has achieved its probity and control objectives in the past, it has placed certain unique restrictions over the ability of the company to maximize value to all shareholders. This new regime will allow Jupiters the flexibility to respond quickly to market opportunities as we pursue our strategy for growth.”
In the heart of Australia`s Gold Coast, Conrad Jupiters combines the amenities of a world-class casino resort with a subtropical beach environment. The resort features more than 600 guest rooms and suites, six restaurants, nine bars, an elaborate pool and a fitness center
Conrad International Treasury Casino-Brisbane is a blend of Old World charm and contemporary comfort and convenience, housed in an historic masterpiece of Australian colonial architecture. The property has 130 guest rooms and suites, four restaurants, seven bars and a fitness center.