Isle of Capri Casinos Inc (fka ISLE)

[Enterprising Investor]

Exclusive: Isle of Capri Casinos in renewed sale talks - sources (6/30/14)

By Mike Stone

(Reuters) - Isle of Capri Casinos Inc (ISLE.O) is in advanced talks to sell itself to casino real estate owner Gaming and Leisure Properties Inc (GLPI.O), people familiar with the situation said on Monday.

St. Louis Missouri-based Isle of Capri renewed discussions in recent months with Gaming and Leisure Properties, a real estate investment trust (REIT), after a broader sale process involving several potential buyers petered out earlier this year, the people said.

Shares of both companies surged after news of the talks. Isle's stock jumped as much as 10 percent before closing up 5 percent. Gaming and Leisure Properties closed up 2.2 percent.

Isle of Capri, advised by boutique investment bank Peter J Solomon, is weeks away from a potential deal, the people said, cautioning that the talks could still fall apart.

Isle of Capri has an enterprise value of $ 1.29 billion, comprised of $969 million in debt and $325 million in equity value. It owns and operates 15 gaming and entertainment facilities in Mississippi, Louisiana, Iowa, Missouri, Colorado, Pennsylvania and Florida, according to the company's last earnings announcement.

Spokespersons for Isle of Capri and Peter J. Solomon Company declined to comment. Gaming and Leisure Properties did not immediately respond to a request for comment. The people asked not to be named because the talks were not public.

A transaction, if finalized, would require the REIT to locate an operating partner for each of Isle of Capri Casino's gaming operations. Because Gaming and Leisure Properties is a REIT, for tax purposes it must receive a vast majority of its revenue from tenant rent, not casino operations.

In addition to having to line up an operating partner, the transaction would also require shareholder approval and gaming license transfer approval in many jurisdictions, one of the people added.

Gaming and Leisure Properties is a REIT created by the spin-off of Penn National Gaming Inc's (PENN.O) real estate assets in 2013.

Since the spin-off, Gaming and Leisure Properties has been aggressively looking to expand their real estate holdings by approaching casinos, the people said.

So far this year, Isle's stock is down over 11 percent, Penn National is down more than 16 percent.


(additional reporting by Soyoung Kim; editing by Andrew Hay)

http://www.reuters.com/article/2014/06/30/us-isle-capri-casi-sale-exclusive-idUSKBN0F52J420140630