Trust goes a long way with the Nevada Gaming Commission.
The five-member commission’s high level of trust in Golden Entertainment Chairman and CEO Blake Sartini sealed a unanimous vote Thursday to approve Golden’s $850 million acquisition of American Casino &Entertainment Properties, which includes the Stratosphere.
With the last regulatory hurdle cleared, the deal is expected to close within days.
Commissioners applauded Sartini’s history in and commitment to Southern Nevada as the owner of Golden, operator of the PT’s Pub tavern chain, the state’s largest slot route network and three casinos in Pahrump. Golden also has Montana’s largest slot route and a casino in Flintstone, Maryland.
The acquisition of ACEP will add four casinos to Golden’s portfolio, including the Stratosphere, two locals-oriented Arizona Charlies’ properties and the Aquarius, the market leader in Laughlin.
The addition of the ACEP properties by Golden is expected to double the company’s revenue and triple its cash flow.
Sartini told commissioners, meeting in Carson City, that his executive team will see the addition of Edward Martin, chief financial officer of ACEP, as chief administrative officer.
“This is really a transformational transaction for our company,” Sartini said in his presentation.
“We’re not building four major casino resorts from the ground up, which obviously would be a much bigger undertaking in regards to growing the company,” he said. “We’re really taking on what I think is a very experienced and credible team to bolster our existing family of team members and it’s a business I’ve been involved in since 1982.”
When the acquisition is completed, Golden will have more than 15,800 slot machines and 114 table games in eight regional casinos and 5,100 hotel rooms, 56 taverns and 7,200 employees.
Golden is paying $781 million in cash and about 4 million shares of Golden stock issued to the previous owner, Whitehall Street Real Estate Partners 2007, a real estate equity fund managed by the Merchant Banking Division of Goldman Sachs. When the transaction is complete, Whitehall will control about 15 percent of Golden’s stock.
Golden has received financing totaling $1.1 billion from JPMorgan Chase Bank, Credit Suisse, Macquarie Capital and Morgan Stanley &Co. to fund the cash consideration as well as to refinance Golden’s existing credit facilities. The financing commitment includes a $100 million revolving credit facility to support Golden’s future growth plans.
Gaming Commission Chairman Tony Alamo said he’s eager to see what Golden can do with the Stratosphere, which he thinks was built before its time.
“This is actually two companies coming together, bringing the positives together,” Alamo said. “The Stratosphere is iconic. Whenever you see Las Vegas, it’s always part of the landscape. It was probably put at the right place at the wrong time, 25 years too early. It’s in a very challenged area. Everyone comes to Vegas to see it, but they don’t want to stay there. But I think the north part of the Strip is going to revitalize.”
Commissioner Philip Pro applauded the way Sartini has paid close attention to the communities in which he has located and he expects that to continue.
“I think it’s so important the way you have assembled this team and your involvement,” Pro said. “You know the communities that you’re talking about, not just the gaming communities but the communities. It means something to you and that comes through in your presentation and it comes through in what you’re doing in each of these locales.”
Commissioner John Moran added, “I fully expect this to be spectacular.”
Golden Entertainment Chairman and CEO Blake Sartini and Nevada Gaming Commission members used the term “north Strip” when discussing the Stratosphere, but there are some who would dispute the use of that phrase.
Clark County officials adamantly refer to the Las Vegas Strip’s north end beginning at Sahara Avenue.
The 2,500-room hotel with its 1,149-foot tower is on Las Vegas Boulevard north of Sahara, technically within the city limits of Las Vegas.