Isle of Capri Buys a Mississippi Casino for $80 Million

Wed, 14 Apr 2010 09:31
For $80 million in cash, Isle of Capri Casinos has finally sealed a deal with Bally Technologies to get Rainbow Casino in Vicksburg Mississippi on board.  The transaction will be finalized on June 30, considering the pending regulatory approval. The announcement didn't come as a surprise since Bally Technologies, a slot machine manufacturing company based in Las Vegas, had been considering the sale of the small casino for years, according to reports. On acquiring Rainbow Casino James Perry, Chief Executive Officer of Isle of Capri is happy to confirm the acquisition.  The Isle of Capri CEO sees the acquisition as a perfect opportunity for expansion.  The St. Louis-based company will be able to extend its operation to Mississippi.  Currently, the company operates several casinos in different locations such as Biloxi, Natchez, and Lula.  It seems that Perry had carefully considered this rather costly business decision.  According to the CEO, Rainbow Casino has a solid business model, which makes a good match to the Isle portfolio.  It has been a successful facility, owned by Bally Technologies for 16 years.  It has up to 350 employees and offers 25,000 sq. ft. of gaming area with an 89-room hotel. On the decision to sell Rainbow Casino, Richard Haddrill, the Chief Executive Officer of the Las Vegas-based company, explained that the the company is shifting its focus on its true business identity.  It aims to specialize in providing games and systems technology that meet industry standards and has the potential to lead the market. Bally's contract with Isle of Capri The partnership between Isle of Capri and Bally extends to casino management system.  Aside from the $80-million casino purchase, Bally also announced that it will be taking over the casino management system of Isle of Capri, formerly controlled by one of its competitors.  Isle of Capri will be using a Bally system and server-based gaming product. The contract involves Isle of Capri's 10 casinos.  The rest of its properties were said to be using Bally systems already.  In a report, it is said that for the next few years, Isle of Capri is expecting to "roll out this technology." On Bally's financial projections There will be changes in the financial projections of Bally Technologies, the company that recently sold its Rainbow Casino, for 2010, considering the recent agreement with Isle of Capri and the not-so-impressive sales performance of the gaming equipment early this year. Apparently, the Las Vegas-based manufacturing company is counting on $2.15 to $2.2 earnings per share for the fiscal year, which will end on June 30.  There is a marked drop from its earlier forecast, which is $2.30 to $2.55 per share. The company also has to deal with halted gaming in Alabama.  It is said that Bally had invested $5 million in terms of development financing and had up to 1,750 machines set in four locations.  The gambling equipment costs about $7 million.  Unfortunately, the company declared uncollected funds amounting to $1 million.  Based on the developing events in the state, the company may have to deal with impaired portion of its assets. Despite the early struggles, the company is optimistic that they will be able to rely on their long-term prospects to stay afloat, according to Haddrill.  This is in spite of the rather slow customer capital deployment this year.  The Bally CEO added that there are orders for new wheel-based slot machines, which were featured through the Global Gaming Expo the previous year.

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