Isle of Capri chain buying Lady Luck for $258 million

Gary Thompson

Wednesday, Oct. 6, 1999 | 11:19 a.m.

Isle of Capri Casinos Inc. said today it will buy Lady Luck Gaming Corp. of Las Vegas for $258 million, including assumption of $177 million of debt.

The agreement includes a $12-per-share price, or $59 million total, for Lady Luck common stock, a 41 percent premium over Tuesday's closing price of $8.50 a share, as well as redemption of $22 million of Lady Luck Gaming preferred stock.

Lady Luck common jumped nearly 25 percent in heavy late-morning trading today, to $10.125 a share. Biloxi, Miss.-based Isle of Capri stock was off 50 cents, to $9.40625 a share.

The total value of the agreement is about 6.6 times trailing 12-months' cash flow of $39.1 million.

Las Vegan Andrew Tompkins, who owns 46 percent of Lady Luck Gaming and is the company's chairman, has agreed to vote for the transaction, which is expected to close in the first half of 2000.

A little over a month ago, Tompkins agreed to sell his separately held Lady Luck hotel-casino in Las Vegas and the "Lady Luck" trademark to Lady Luck Gaming for $45.5 million.

Lady Luck Gaming operates dockside riverboat hotel-casinos in Coahoma and Natchez, Miss., and owns a 50 percent interest in the Lady Luck facility in Bettendorf, Iowa.

Isle of Capri said it has signed a letter of intent to buy the other half interest in the Bettendorf hotel-casino -- owned by the family of Isle of Capri Chairman Bernard Goldstein -- for 6.3 million shares of Isle of Capri stock. The family has the option to receive up to $10 million of their compensation in cash rather than stock.

The Bettendorf transaction is contingent on Isle of Capri completing the Lady Luck Gaming acquisition and approval of Isle of Capri's shareholders.

In addition to acquiring the Lady Luck hotel-casino in Las Vegas, Lady Luck Gaming has previously announced plans to buy the Miss Marquette Casino in Marquette, Iowa, for $41.7 million.

Isle of Capri said today it will lend Lady Luck Gaming $16.3 million to help consummate the Miss Marquette purchase, which is expected to close later this month.

Goldstein said the Lady Luck Gaming merger will make Isle of Capri "one of the 10 largest public gaming companies in the United States."

Isle of Capri owns seven riverboat, dockside or land-based casinos in Biloxi, Tunica and Vicksburg, Miss.; Bossier City and Lake Charles, La.; and Black Hawk, Colo. It also operates the Pompano Park harness racing track in Florida and an Isle of Capri casino aboard the Enchanted Capri cruise ship that sails out of New Orleans.

Lady Luck's Tompkins said the $12-per-share price will benefit shareholders. Lady Luck Gaming stock has traded as low as $2.50 a share during the past 12 months.

He said the $16.3 million bridge loan from Isle of Capri "will enable us to conclude the Miss Marquette acquisition without being subject to the uncertainties of the high-yield debt market."

Furthermore, Tompkins said, "In a consolidating industry, our employees will have the opportunity to be part of a strong company with a significant position in the gaming industry."