American Real Estate Partners, L.P. Agrees To Acquire Arizona Charlie's Casinos in Las Vegas
Monday January 5, 5:44 pm ET
MOUNT KISCO, N.Y., Jan. 5 /PRNewswire-FirstCall/ -- American Real Estate Partners, L.P. (NYSE: ACP - News; "AREP"), announced today that American Casino & Entertainment Properties LLC ("American Casino"), an indirect wholly-owned subsidiary of AREP, has agreed to acquire Arizona Charlie's Decatur and Arizona Charlie's Boulder, two casinos in Las Vegas, from Carl C. Icahn and an entity affiliated with Mr. Icahn, for aggregate consideration of $125,900,000. Mr. Icahn is the chairman of the board of directors of the general partner of AREP. The closing of the acquisition is subject to certain conditions, including, among other things, obtaining all approvals necessary under gaming laws, but is not subject to financing. Upon the closing of the acquisition and upon receiving all approvals necessary under gaming laws, American Real Estate Holdings Limited Partnership, a subsidiary of AREP, will transfer 100% of the common stock of Stratosphere Corporation, the entity that owns the Stratosphere Casino Hotel & Tower, to American Casino. As a result, following the acquisition and the contribution, American Casino will own and operate three gaming and entertainment properties in the Las Vegas metropolitan area.
In connection with the transaction, American Casino intends to seek to raise $200,000,000 pursuant to an offering of senior secured notes due 2012. The notes will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Stratosphere
The Stratosphere, which offers the tallest free-standing observation tower in the United States, is situated on approximately 31 acres of land located at the northern end of the Las Vegas Strip. The facility is a tourist-oriented gaming and entertainment destination property, which has approximately 80,000 square feet of gaming space, 2,444 hotel rooms, eight restaurants and approximately 110,000 square feet of developed retail space. The Stratosphere features three of the most visited amusement rides in Las Vegas: the Big Shot, a 16-seat ride that catapults passengers up a 160-foot mast in approximately 2.5 seconds with the force of approximately four G's; the High Roller, a 28-seat roller coaster that takes passengers on a 34-mile-per-hour ride around the Stratosphere at a height of more than 900 feet; and the recently launched X Scream, an eight-seat thrill ride which launches passengers approximately 30 feet over the side of the Stratosphere, giving riders the sensation that they are about to fall off the top of the building.
Arizona Charlie's Decatur
Arizona Charlie's Decatur is located on approximately 17 acres of land, four miles west of the Las Vegas strip. An estimated 500,000 people live within a five-mile radius of the property. The property is easily accessible from Route 95, a major highway in Las Vegas. Arizona Charlie's Decatur contains approximately 52,000 square feet of gaming space, 258 hotel rooms, four restaurants and three bars. The property targets repeat customers from the surrounding communities.
Arizona Charlie's Boulder
Arizona Charlie's Boulder is located on approximately 24 acres of land, seven miles east of the Las Vegas strip, near an I-515 interchange. The I-515 is the most heavily traveled east/west highway in Las Vegas. An estimated 423,000 people live within a five-mile radius of the property. Arizona Charlie's Boulder contains approximately 41,000 square feet of gaming space, 303 hotel rooms, four restaurants and a 202-space recreational vehicle park. As with the Arizona Charlie's Decatur property, the property targets repeat customers from the surrounding communities.
Estimated 2003 Performance
American Casino estimates that, for the year ended 2003, the combined net revenues of the three properties will be in the range of $262.0 million to $264.0 million, combined EBITDA will be in the range of $42.5 million to $44.0 million and combined net income will be in the range of $9.3 million to $9.9 million.
The following table reconciles estimated net income to estimated EBITDA, in each case at the midpoint of the estimated range.
Year Ending
December 31, 2003
(in thousands)
Estimated net income $9,609
Estimated other expenses, primarily interest $6,282
Estimated provision for income tax $7,308
Estimated depreciation and amortization $20,024
Estimated EBITDA $43,223
The above amounts are based upon many estimates which may be subject to adjustment in connection with the audit of year-end results. The inclusion of these estimates should not be regarded as an indication that either AREP or American Casino considers these estimates to be a reliable prediction of actual results. Actual results may differ materially from those expressed or implied. Neither AREP nor American Casino intends to update or otherwise revise these estimates to reflect circumstances existing after the date when made or to reflect the occurrence of future events if any or all of the assumptions underlying these estimates are shown to be in error.
These estimates were not prepared with a view to compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants regarding estimates or forecasts. These forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995) are subject to significant contingencies and uncertainties that could cause actual results to differ materially from these estimates. There can be no assurance that the assumptions made in preparing these estimates will prove accurate, and actual results may be materially different than those contained in these estimates.
American Real Estate Partners, L.P. is a master limited partnership.
This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, many of which are beyond our ability to control or predict. Among these risks and uncertainties are changes in general economic conditions, the extent, duration and strength or any economic recovery, the extent of any tenant bankruptcies and insolvencies, our ability to maintain tenant occupancy at current levels, our ability to obtain, at reasonable costs, adequate insurance coverage, competition for investment properties and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2002 Form 10-K and Form 8-Ks.
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Source: American Real Estate Partners, L.P.
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