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Proposed Eldorado Transaction
6 Months Ended
Aug. 31, 2013
Subsequent Events [Abstract]  
Proposed Eldorado Transaction
Proposed Eldorado Transaction
On September 9, 2013, Eldorado and MTR Gaming Group, Inc. (“MTR”), a publicly traded company, announced that they had entered into a definitive agreement (the “Combination Agreement”), which provides for the combination of MTR and Eldorado in a stock merger. As part of the transaction, a cash election option will be offered at $5.15 per share for up to approximately 5.8 million shares to MTR’s current stockholders. MTR’s remaining common shares will be exchanged for shares in the combined new company, which is to be publicly traded under the name Eldorado Resorts, Inc. (“New Eldorado”).
Under the terms of the Combination Agreement, the transaction value of Eldorado will be determined by Eldorado’s adjusted EBITDA for the twelve-month period specified in the Combination Agreement multiplied by 6.81, less net debt and other adjustments. Based on Eldorado’s adjusted EBITDA for the twelve-month period ended June 30, 2013 (including its interest in Silver Legacy), Eldorado’s owners, including the Company, would receive in exchange for their current interests in Eldorado, an aggregate of approximately 35.6 million shares, or approximately 55% of the total shares, in New Eldorado valued at $5.15 per share. These valuation metrics and the Company’s percentage ownership interest in Eldorado would yield a value to the Company that exceeds the Company’s current carrying value of its investment in Eldorado. Based upon this calculation, the Company would at closing acquire ownership of between 9% and 10% of New Eldorado. The closing of the proposed transaction is subject to a number of conditions. In addition, subsequent to the date the parties entered into the Combination Agreement, MTR received another offer that, if accepted by MTR, would preclude the consummation of the transaction contemplated by the Combination Agreement. Accordingly, there can be no assurance that the transactions contemplated by the Combination Agreement will be completed. The Company is unable to determine at this time the impact on the Company if the transactions contemplated by the Combination Agreement are consummated. The foregoing discussion is qualified in its entirety by reference to the Combination Agreement, a copy of which is included as an exhibit to this report.