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Sierra Design deal modified

Tuesday, Jan. 4, 2005 | 10:47 a.m.

Alliance Gaming Corp. will buy out a contingency agreement in its deal to acquire Sierra Design Group of Reno.

The Las Vegas-based gaming equipment manufacturer announced today that it would pay $40 million to buy the "earnout" portion of the purchase price paid for SDG, which Alliance first announced in November 2003. Under terms of the original contingency, the price was based on SDG's achievement of revenue and cash flow targets over the next three fiscal years and could have resulted in the company paying as much as $95 million more.

Under the new terms, Alliance will pay $12 million in cash and a $28 million unsecured promissory note payable over five years with interest. The new terms brings the total purchase price for SDG to $165 million.

Deutsche Bank Securities gaming analyst Marc Falcone said the deal is a good strategic move for Alliance that would likely reduce the company's outlay for SDG.

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