The Tunica, Mississippi-based Gold Strike Casino will no longer be operating under the management of the US global hospitality and entertainment company MGM Resorts International.
On June 9th, MGM Resorts revealed that it had managed to reach an acquisition deal over the ownership of Gold Strike Tunika with CNE (Cherokee Nation Entertainment Gaming Holdings LLC). Under the provisions of the agreement, CNE, which currently operates as a daughter company of the American conglomerate holding operator Cherokee Nation Businesses, is set to take over the casino resort after making a cash payment of $450 million.
The newly-announced deal has still not been completed as it is subject to customary adjustments.
Gold Strike started operation almost 30 years ago – in 1994 – as the tallest building in Mississippi with its 32 stories and was taken over by MGM Resorts in 2005.
In a press release published by MGM Resorts International, the company’s CEO and President Bill Hornbuckle explained that his company had made a decision to dispose of the Tunica-based casino resort as part of its plans to narrow down its holding in the state of Mississippi to a single resort, Beau Rivage. He also described Gold Strike as “a wonderful property” with a bright future ahead of it and expressed his gratitude to the employees of the resort for the excellent work they did over the years.
Gold Strike Casino to Continue Being Operated by VICI Properties
Since the deal is subject to some regulatory body approvals and other closing conditions, it is expected to be finalized over the first half of the following year.
As officially announced by MGM Resorts, the Gold Strike casino will continue to be operated by VICI Properties Inc. under a lease agreement that has been previously made with MGM Resorts. At the time when the transaction with Cherokee Nation Businesses is finalized, the master lease agreement that MGM Resorts has with VICI Properties is set to be amended, and the annual rent is set to be reduced by $40 million. The company has shared expectations that the net cash proceeds after estimated fees and taxes will amount to about $350 million.
Gold Strike reported that its net income for the full calendar year of 2021 amounted to $81.1 million. The casino resort further revealed that its adjusted property earnings before interest, tax, depreciation, amortization and restructuring or rent costs (EBITDAR) for 2019 were $67 million. The price of the takeover deal between MGM Resorts and CNE represents an 11x multiple on the property’s average adjusted EBITDA in the period between 2019 and 2021.
According to MGM Resorts’ CFO and Treasurer Jonathan Halkyard, the sale of the Gold Strike casino property would help the operator reprioritize future capital expenditures toward initiatives that will give it the chance to enhance the customer experience at the rest of the MGM properties.
As mentioned above, once the deal is finalized, MGM Resorts is to leave Tunica and will focus on its one remaining casino resort in the state of Mississippi, Beau Rivage.