Richmond-based Great Canadian Gaming (GC) will soon be adding Casino New Brunswick (CNB) to its current roster of seventeen (17) gaming properties spread across North America. GC President and Chief Executive Officer Rod Baker announced last Tuesday (May 12, 2015) that his company and CNB-owner Sonco Gaming New Brunswick LP, have agreed to an acquisition deal that will see the transfer of ownership of all CNB assets and undertakings to Great Canadian Gaming. In return, Sonco Gaming will receive an estimated CA$95 million in cash as settlement, which GC will finance using its existing available cash.
The acquisition price represents around 8x to 8.5x the amount of CNB’s normalized Earnings Before Interests, Taxes, Depreciation and Amortization (EBITDA) for 2014. The New Brunswick casino, being the only full-service casino gaming facility in NB province, posted revenue of around CA$38 million in 2014.
Casino New Brunswick is a hotel-casino entertainment complex built in 2008 in line with the New Brunswick Lotteries and Gaming Corporation (NBLGC)’s selection of Sonco Gaming NB Ltd, as the province’s sole Casino Service Provider. The construction of CNB was a joint venture collaboration between Sonco Gaming, Toronto equity management firm Clairvest and Nevada-based gaming company Navegante Group. Actual construction of the hotel casino complex was undertaken by the Marco Group of Canada also in 2008, and was completed in 2010 at an approximate total costs of CA$90 million.
In view of the Casino Service Provider Agreement signed with the provincial lottery corporation, which will be in effect up to December 31, 2030, the finalization of the acquisition agreement is subject to the approval of the NBLGC. The CNB acquisition deal is expected to attain full completion by December 31, 2015.
When asked about the reason for its decision to sell Casino New Brunswick, Maria Klyuev, the Director of Investor Relations and Marketing of the Clairvest Group responded by conveying that GC proffered a concrete financial offer to Sonco Gaming. Ms. Klyuev refrained from commenting further, citing the need to first secure approval from the New Brunswick provincial government before the deal could be finalized. She also made it clear that Soncos’ other casino, the Grey Rock Entertainment Centre in Edmundston, is not part of the GC-Sonco acquisition deal.
Nevertheless, GC President and CEO Rod Baker remarked in his announcement that CNB, is a first-class casino gaming and entertainment destination serving both local guests from Moncton, and those coming from across New Brunswick and from other Atlantic Canada areas. The move to acquire the only full-service casino in New Brunswick presents a significant opportunity, not only for value creation but in further expanding Great Canadian’s Canada footprint as well.
Based on its March 15, 2015 report, GC currently operates seventeen (17) gaming properties comprising three (3) community gaming centers, four (4) racetracks and ten (10) casinos with a 4-diamond hotel, located in the Canadian provinces of British Columbia, Nova Scotia, Ontario and in the State of Washington in the U.S.