Park Place Entertainment Corporation (NYSE:PPE) today announced the completion of the Claridge Hotel and Casino acquisition in Atlantic City, N.J., effective at 6 a.m. June 1, 2001. The announcement was made following the May 30 approval of the acquisition by the New Jersey Casino Control Commission.
The Claridge, adjacent to Bally’s Atlantic City, adds 500 rooms, 59,000 square feet of gaming space, a 600-seat theater and 1,200 parking spaces to the Company’s center-Boardwalk complex, which includes Bally’s, Caesars and the Wild Wild West casinos. The Company is currently designing an elevated “connector” between Bally’s and the Claridge, which will include retail and meeting space.
The Company paid a net purchase price of approximately $65 million, representing a purchase multiple of 5.4x adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, bankruptcy court costs and other non-recurring charges) of approximately $12 million for the year 2000.
“This strategic transaction gives us an additional asset at the center of the Boardwalk, the best real estate in Atlantic City. It’s instantly accretive to earnings and adds more critical mass to our operating infrastructure in Atlantic City,” said Thomas E. Gallagher, president and chief executive officer of Park Place Entertainment. “The Claridge will be warmly welcomed into the Park Place family. We appreciate the efforts of the Claridge team; they have worked hard through difficult times.”
Park Place intends to keep the Claridge name and will fold the property into its maintenance capital program, investing 5 percent of revenues in maintenance projects that help assure assets will produce maximum revenues.