Lender Presentation July 16, 2013 Exhibit 99.1 |
Safe Harbor/Non-GAAP Financial Disclosures 2 Forward-Looking Statements Non-GAAP Financial Measures This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on Pinnacle’s and Ameristar’s current expectations and are subject to uncertainty and changes in circumstances. These forward-looking statements include, among others, statements regarding the expected synergies and benefits of a potential combination of Pinnacle and Ameristar, including the expected accretive effect of the merger on Pinnacle’s financial results and profile (e.g., free cash flow and Consolidated Adjusted EBITDA); the anticipated benefits of geographic diversity that would result from the merger and the expected results of Ameristar’s gaming properties; expectations about future business plans, use of proceeds from financing, prospective performance and opportunities; required regulatory approvals; the expected timing of the completion of the transaction; and the anticipated financing of the transaction. These forward-looking statements may be identified by the use of words such as “expect,” “anticipate,” “believe,” “estimate,” “potential,” “should”, “will” or similar words intended to identify information that is not historical in nature. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. There is no assurance that the potential transaction will be consummated, and there are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements made herein. These risks and uncertainties include (a) the timing to consummate a potential transaction between Pinnacle and Ameristar may be delayed based on circumstances beyond Pinnacle’s control, including the ability of Pinnacle to reach a resolution with the Federal Trade Commission (“Commission”); (b) the ability and timing to complete the dispositions proposed as part of the effort to reach a resolution with the Commission; (c) the ability and timing to obtain required regulatory approvals and satisfy or waive other closing conditions; (d) the possibility that the merger does not close when expected or at all; or that the companies may be required to modify aspects of the merger to achieve regulatory approval; (e) Pinnacle’s ability to realize the synergies contemplated by a potential transaction; (f) Pinnacle’s ability to promptly and effectively integrate the business of Pinnacle and Ameristar; (g) uncertainties in the global economy and credit markets and its potential impact on Pinnacle’s ability to finance the transaction; (h) the outcome of any legal proceedings that may be instituted in connection with the transaction; (i) the ability to retain certain key employees of Ameristar; (j) that there may be a material adverse change affecting Pinnacle or Ameristar, or the respective businesses of Pinnacle or Ameristar may suffer as a result of uncertainty surrounding the transaction; (k) Pinnacle’s ability to obtain financing on the terms expected, or at all; and (l) the risk factors disclosed in Pinnacle’s most recent Annual Report on Form 10-K, which Pinnacle filed with the Securities and Exchange Commission on March 1, 2013 and the risk factors disclosed in Ameristar’s most recent Annual Report on Form 10-K, which Ameristar filed with the Securities and Exchange Commission on February 28, 2013, and in all reports on Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission by Pinnacle and Ameristar subsequent to the filing of their respective Form 10-Ks for the year ended December 31, 2012. Forward-looking statements reflect Pinnacle’s and Ameristar’s management’s analysis as of the date of this release. Pinnacle and Ameristar do not undertake to revise these statements to reflect subsequent developments, except as required under the federal securities laws. Readers are cautioned not to place undue reliance on any of these forward-looking statements. As used in this presentation, Consolidated Adjusted EBITDA, Consolidated Adjusted EBITDA margin, and Discretionary Cash Flow are non-GAAP measurements. Pinnacle defines Consolidated Adjusted EBITDA as earnings before interest income and expense, income taxes, depreciation, amortization, pre-opening and development expenses, non-cash share-based compensation, asset impairment costs, write-downs, reserves, recoveries, corporate-level litigation settlement costs, gain (loss) on sale of certain assets, loss on early extinguishment of debt, gain (loss) on sale of equity security investments, minority interest and discontinued operations. Pinnacle defines Consolidated Adjusted EBITDA margin as Consolidated Adjusted EBITDA divided by revenues. Pinnacle defines Discretionary Cash Flow as Consolidated Adjusted EBITDA less maintenance capital expenditures, cash paid for income taxes and cash paid for interest expense. Ameristar defines Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, other non-operating income and expenses, stock-based compensation, deferred compensation plan expense, non-operational professional fees and river flooding expenses and reimbursements. As shown below, the Combined Adjusted EBITDA is shown on a combined basis of Pinnacle’s Consolidated Adjusted EBITDA and Ameristar’s Adjusted EBITDA for the period ended March 31, 2013, taking into account synergies Pinnacle expects to achieve. This presentation is for informational purposes only and shall not constitute an offer to sell nor the solicitation of an offer to buy any securities of Pinnacle or any other issuer. |
Today’s Speakers Anthony Sanfilippo Pinnacle Entertainment Chief Executive Officer Carlos Ruisanchez Pinnacle Entertainment President & Chief Financial Officer 3 |
4 • On December 21, 2012, Pinnacle announced the acquisition of Ameristar Casinos, Inc. • Upon consummation of the transaction, Pinnacle Entertainment is expected to be a multi-jurisdictional gaming company with 18 properties and a presence in 13 gaming geographies • For the TTM period ended 3/31/2013, Pinnacle generated Consolidated Adjusted EBITDA of $285M Pro Forma for the acquisition, Pinnacle’s TTM at 3/31/13 Consolidated Adjusted EBITDA would have been $683M • Pinnacle intends to raise: $1,000M, 5-year Revolver $1,600M, 7-year Term Loan B Up to $800M of new Senior Unsecured Notes • Pinnacle intends to use the proceeds to fund the aggregate cash consideration for its pending acquisition of Ameristar, refinance its existing credit facilities, pay related transaction fees and expenses, redeem its existing 8.625% senior notes due 2017 and provide working capital and funds for general corporate purposes after the acquisition Ameristar Transaction Overview 1. For a reconciliation of these non-GAAP financial measures, please see the Appendix at the end of this presentation. Pro forma Consolidated Adjusted EBITDA represents the sum of each company’s reported TTM at 3/31/13 Consolidated Adj. EBITDA plus $40M of synergies and $10.5M Baton Rouge annualization increment adjustment. Pro forma Consolidated Adjusted EBITDA does not reflect the removal of Adjusted EBITDA from Lumiere Place Casino and Hotels. In the TTM period ended 3/31/13, the net revenues and Adjusted EBITDA for Pinnacle’s St. Louis segment were $389.4M and $98M, respectively. In the TTM period ended 3/31/13, Lumiere Place Casino and Hotels generated net revenues and Adjusted EBITDA of $190.7M and $34.3M, respectively, comprising 49% and 35% of the St. Louis segment results, respectively. 1 |
$26.50 in cash per ASCA share $2.8B total consideration, including assumed debt 7.7x 2012 Consolidated Adjusted EBITDA Committed debt financing FTC consent order & remaining state regulatory approvals 3Q13, subject to customary closing conditions and remaining required regulatory approvals Ameristar Acquisition Overview 5 Per Share Consideration Enterprise Value Ameristar Valuation Sources of Financing Approval Process Expected Closing |
Pro Forma Company Profile 6 + = Pro Forma % Growth 3 TTM 3/31/13 Net Revenues 1 $1,217 $1,178 $2,457 101.9% TTM 3/31/13 Adj. EBITDA 2 $285 $348 $683 140.2% TTM 3/31/13 Adj. EBITDA Margin 2 23.4% 29.6% 27.8% 440 bps # of Properties 9 9 18 100.0% # of Hotel Rooms 2,489 2,414 4,903 97.0% # of Slots 10,821 12,610 23,431 116.5% # of Tables 378 317 695 83.9% # of Employees 8,479 7,115 15,594 83.9% Source: Company Reports and SEC Filings 2. For a reconciliation of these non-GAAP financial measures, please see the Appendix at the end of this presentation. Pro forma Consolidated Adjusted EBITDA represents the sum of each company’s reported TTM at 3/31/13 Consolidated Adj. EBITDA plus $40M of synergies and $10.5M Baton Rouge annualization increment adjustment. 3. Represents percent growth from Pinnacle stand-alone operations. Note: Historic and Proforma statistics and financial data do not give effect to the anticipated regulatory divestitures of Lumiere Place Casino and Hotels and Ameristar’s Lake Charles development project. In the TTM period ended 3/31/13, the net revenues and Adjusted EBITDA for Pinnacle’s St. Louis segment were $389.4M and $98M, respectively. In the TTM period ended 3/31/13, Lumiere Place Casino and Hotels generated net revenues and Adjusted EBITDA of $190.7M and $34.3M, respectively, comprising 49% and 35% of the St. Louis segment results, respectively. 1. Pro forma combined company net revenue adjusted for $62M Baton Rouge annualization increment. ($M) |
Enhanced Footprint in Attractive Markets 7 • A leading gaming company in the U.S. • PF Net Revenues of $2.5B (TTM at 1Q13) • PF Consolidated Adj. EBITDA of $683M (TTM at 1Q13) Ameristar Pinnacle Entertainment • 18 properties in 13 distinct geographies • 4,903 rooms • 23,431 slot machines • 695 table games East Chicago St. Charles Council Bluffs Kansas City Blackhawk Lake Charles Vicksburg Note: Historic and Proforma statistics and financial data do not give effect to the anticipated regulatory divestitures of Lumiere Place Casino and Hotels and Ameristar’s Lake Charles development project |
8 Complementary Properties |
9 With Strong Brands |
10 In Attractive Gaming Markets |
11 Well Maintained, No Deferred Maintenance |
Transaction, FTC, & Regulatory Process Update 12 FTC Process Update State Gaming Regulators • The FTC filed an administrative complaint seeking to block the transaction due to concerns regarding unfair competition in St. Louis, MO and Lake Charles, LA • An agreement in principle was reached with the FTC Bureau of Competition Staff regarding proposed divestiture remedies to gain clearance to close the transaction. Remedies include: • Received Nevada, Iowa, Mississippi and Indiana regulatory approval • Louisiana and Missouri regulatory approvals are expected in July 2013 Transaction Process • Transaction received ASCA shareholder approval • Received requisite consents on Ameristar’s 7.5% Senior Notes due 2021 in April 2013 • Meaningful progress on integration planning and synergies A sale of Lumière Place Casino & Hotel and the Four Seasons Hotel & Spa St. Louis A sale of the Ameristar Lake Charles development project • Detailed terms and conditions of the proposed divestiture remedies are currently being negotiated, with a Consent Order finalizing the process expected to be approved by the FTC in early August 2013 |
Regulatory Asset Divestiture Update 13 • Net divestiture proceeds from Lake Charles will be used to repay debt and reduce leverage, post close • Upon completion, the divestiture of the Lake Charles project eliminates meaningful future growth cap ex commitments, which is expected to enhance free cash flow generation and hasten debt repayment and leverage reduction • Ameristar has previously disclosed that through 3/31/13, it had invested total capital of $144.5M in the Lake Charles project, and that it expects capital spending of $84.0 million related to Lake Charles design and construction costs in 2Q13. • Net divestiture proceeds from Lumiere Place Casino and Hotels will be used to repay debt and reduce leverage, post close • In the TTM period ended 3/31/13, the net revenues and Adjusted EBITDA for Pinnacle’s St. Louis segment were $389.4M and $98M, respectively. In the TTM period ended 3/31/13, Lumiere Place Casino and Hotels generated net revenues and Adjusted EBITDA of $190.7M and $34.3M, respectively, comprising 49% and 35% of the St. Louis segment results, respectively. Lumière Place Casino and Hotels Ameristar Casino Resort Spa Lake Charles |
14 Key Credit Considerations |
15 Our combination with Ameristar is transformative and brings together two complementary asset portfolios Our geographic, financial and operational diversification will be significantly enhanced We expect to have a much larger cash flow base, with increased scale and distribution We expect to generate at least $40M of annual synergies We expect the combined company will generate significant discretionary cash flow Pro forma discretionary cash flow is expected to increase from $121M to $315M Merger synergies and tax asset utilization is expected to enhance our cash flow generation Post-completion of Lake Charles divestiture, growth capital spending is limited to the $209M River Downs project and $20M New Orleans hotel expansion We expect to use our enhanced cash flow generation to repay debt and reduce leverage to the targeted range of 3.5x-4.0x Anticipated regulatory divestitures improve the combined Company’s credit profile Upon completion, we expect to use net divestiture proceeds to repay debt and reduce leverage Lake Charles divestiture eliminates significant future growth cap ex commitments; remaining growth cap ex commitments are serviceable with discretionary cash flow We expect divestitures to further enhance diversification and reduce pro forma concentrations in St. Louis and Lake Charles (the combined Company’s two largest gaming geographies) Key Transaction and Credit Highlights 1. For a detailed calculation of Pinnacle Stand Alone and Proforma Combined Company Discretionary Cash Flow, please see the Appendix at the end of this presentation. 1 |
Sources & Uses 16 Sources ($M) Uses ($M) Sources ($M) Amount Uses ($M) Amount Debt summary Equity purchase price @ $26.50 per share $959 $1,000M revolver $387 Term loan B 1,600 Pinnacle Debt Secured debt $1,987 Revolver repayment - Term loan B repayment 319 Assumed existing Pinnacle bonds $675 Refinance existing Pinnacle bonds 446 Assumed existing Ameristar bonds 1,040 Assumed bonds 675 New senior unsecured notes 800 Total Pinnacle debt $1,440 Unsecured debt $2,515 Ameristar Debt Total debt $4,502 Revolver repayment - Term Loan A repayment 190 Term Loan B repayment 685 Assumed 2021 notes 1,040 Existing other debt 0 Total Ameristar debt $1,915 Estimated transaction fees $187 Total sources $4,502 Total uses $4,502 Note: Based on funded debt at close; refinanced debt balances are as of 3/31/13. Not pro forma for the regulatory divestiture of Lumière Place Casino and Hotels and the Ameristar Lake Charles development project |
1. For a reconciliation of non-GAAP financial measures, please see the Appendix . Pro forma Consolidated Adjusted EBITDA represents the sum of each company’s reported TTM at 3/31/13 Consolidated Adj. EBITDA plus $40M of synergies and $10.5M Baton Rouge annualization increment adjustment. Pro forma Consolidated Adjusted EBITDA does not reflect the removal of Adjusted EBITDA from Lumiere Place Casino and Hotels. In the TTM period ended 3/31/13, the net revenues and Adjusted EBITDA for Pinnacle’s St. Louis segment were $389.4M and $98M, respectively. In the TTM period ended 3/31/13, Lumiere Place Casino and Hotels generated net revenues and Adjusted EBITDA of $190.7M and $34.3M, respectively, comprising 49% and 35% of the St. Louis segment results, respectively. 2. Excludes synergies in calculations for pro forma Pinnacle Capitalization ($M) Divestiture Proceeds Merger Pro forma ($M) Pinnacle Ameristar Combined Adjustment Combined (1) Cash $99 $125 $224 - $224 - Revolver - - - - - Term loan A - 190 190 (190) - Term loan B 319 685 1,004 (1,004) - - New revolver - - - 387 387 New term loan B - - - 1,600 1,600 Sr. secured debt 319 875 1,194 793 1,987 PNK - 8.625% Senior notes due 2017 446 - 446 (446) - PNK - 8.75% Senior subordinated notes due 2020 350 - 350 - 350 PNK - 7.75% Senior subordinated notes due 2022 325 - 325 - 325 ASCA - 7.5% Senior unsecured notes due 2021 - 1,040 1,040 - 1,040 Other debt - 0 0 (0) - New senior unsecured notes - - - 800 800 Total debt $1,440 $1,915 $3,355 $1,147 $4,502 TTM 3/31/13 Consolidated Adj. and PF EBITDA 1 $285 $348 $633 $50 $683 TTM 3/31/13 Reported and PF Interest expense 117 116 233 34 267 At closing - 03/31/13 Interest coverage(2) 2.4x 3.0x 2.7x 2.4x Sr. sec. debt / TTM Adj. EBITDA 1.1x 2.5x 1.9x 2.9x Sr. sec. net debt / TTM Adj. EBITDA 0.8x 2.2x 1.5x 2.6x Total debt / TTM Adj. EBITDA 5.1x 5.5x 5.3x 6.6x Total net debt / TTM Adj. EBITDA 4.7x 5.1x 4.9x 6.3x Sr. Secured Debt: Net divestiture proceeds will be used to repay Term Loan B PF total leverage, sr. secured leverage, and interest coverage ratios will benefit from debt pay down with asset sales proceeds. Pro Forma Capitalization 17 |
Attractive Debt Maturity Profile 18 • Pro forma, the Company will have no near term maturities and significant room to generate cash flow and repay or refinance existing debt Note: Based on funded debt, not adjusted for net proceeds from anticipated regulatory divestitures of Lumière Place Casino and Hotels and Ameristar’s Lake Charles development project. New $800M senior unsecured note is assumed to mature in ten years; actual term of note may differ. Revolver TLB PNK notes ASCA notes New senior unsecured notes $2,200 $2,000 $1,800 $1,600 $1,400 $1,200 $800 $600 $400 $0 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22+ $200 $1,000 $1,950 $1,040 $1,125 $387 $1,600 $350 $800 $325 Pro forma Debt Maturity Profile ($M) $1,000 |
Demonstrated History of Growth 19 Pinnacle Historical Consolidated Adj. EBITDA and Combined Pro forma Consolidated Adj. EBITDA ($M) # of assets: # of gaming positions(2): $683.3 $284.5 $285.2 $252.2 $213.6 $160.2 $152.8 $800.0 $700.0 $600.0 $500.0 $400.0 $300.0 $200.0 $100.0 $0.0 2008 2009 2010 2011 2012 TTM 3/31/13 (1) Pro Forma (1) 8 8 8 7 9 9 18 28,296 13,467 13,467 11,688 12,700 12,141 14,090 1. For a reconciliation of these non-GAAP financial measures, please see the Appendix at the end of this presentation. Pro forma Consolidated Adjusted EBITDA represents the sum of each company’s reported TTM at 3/31/13 Consolidated Adj. EBITDA plus $40M of synergies and $10.5M Baton Rouge annualization increment adjustment. Pro forma Consolidated Adjusted EBITDA does not reflect the removal of Adjusted EBITDA from Lumiere Place Casino and Hotels. In the TTM period ended 3/31/13, the net revenues and Adjusted EBITDA for Pinnacle’s St. Louis segment were $389.4M and $98M, respectively. In the TTM period ended 3/31/13, Lumiere Place Casino and Hotels generated net revenues and Adjusted EBITDA of $190.7M and $34.3M, respectively, comprising 49% and 35% of the St. Louis segment results, respectively. Growth rate represents percent growth of pro forma from Pinnacle stand-alone operations. 2. Represents the sum of table games multiplied by seven positions plus total slot positions |
Attractive Margin Opportunity 20 • Combined platform margins to benefit from efficiencies of scale and synergies • Additional margin opportunities from leveraging best practices from both companies and applying them across the combined enterprise Combination With Ameristar Is Significantly Accretive To Pinnacle’s Consolidated Adj. EBITDA Margins 1. For a reconciliation of these non-GAAP financial measures, please see the Appendix at the end of this presentation. Pro forma Consolidated Adjusted EBITDA represents the sum of each company’s reported TTM at 3/31/13 Consolidated Adj. EBITDA plus $40M of synergies and $10.5M Baton Rouge annualization increment adjustment. Pro forma Consolidated Adjusted EBITDA does not reflect the removal of Adjusted EBITDA from Lumiere Place Casino and Hotels. In the TTM period ended 3/31/13, the net revenues and Adjusted EBITDA for Pinnacle’s St. Louis segment were $389.4M and $98M, respectively. In the TTM period ended 3/31/13, Lumiere Place Casino and Hotels generated net revenues and Adjusted EBITDA of $190.7M and $34.3M, respectively, comprising 49% and 35% of the St. Louis segment results, respectively. Growth rate represents basis point increase of pro forma margin from Pinnacle stand- alone operations. 17.0% 20.2% 22.1% 23.8% 23.4% 27.8% 5% 10% 15% 20% 25% 30% 35% 2009 2010 2011 2012 TTM 3/31/13 (1) Pro Forma (1) |
Diversified Revenue Platform 21 • Significantly de-risks the portfolio by more than doubling gaming geographies to 13 • Balanced portfolio decreases pro forma revenue reliance on two largest gaming geographies by more than 20 percentage points • St. Louis and Lake Charles divestitures are expected to further reduce pro forma concentrations Pinnacle 3/31/13 TTM Net Revenue Diversification ¹ Pro Forma 3/31/13 TTM Net Revenue Diversification ¹ St. Louis, MO, 32.4% Lake Charles, LA, 31.4% Belterra, IN, 12.7% New Orleans, LA, 10.0% Baton Rouge, LA, 7.0% Bossier City, LA, 6.6% St. Louis, MO, 26.8% Lake Charles, LA, 15.4% Belterra, IN, 6.3% New Orleans, LA, 4.9% Baton Rouge, LA, 6.0% Kansas City, MO, 8.5% Council Bluffs, 6.7% Vicksburg, MS, 4.8% Denver, CO, 6.5% Greater Chicago, 8.5% Jackpot, NV, 2.3% Bossier City, LA, 3.2% 1. Net revenue is derived from Pinnacle and Ameristar’s respective 10-Qs for the three months ended March 31, 2013 and 2012 and 10-Ks for the twelve months ended December 31, 2012. Net revenue diversification calculations are based upon reported segment net revenue data for Pinnacle in the stand-alone case and for Pinnacle and Ameristar in the pro forma case Note: Historic and pro forma financial data does not give effect to the anticipated regulatory divestiture of Lumiere Place Casino and Hotels, net revenue Data excludes Pinnacle’s Racetrack segment, and pro forma net revenue includes a $62M Baton Rouge annualization increment adjustment. |
Enhanced Scale 22 Net Revenue ($M) EBITDA ($M) Source: Company documents and filings 1. Figures are based on TTM at 3/31/13. For a reconciliation of non-GAAP financial measures, please see the Appendix at the end of this presentation. 2. Pro forma adjustments: BYD for the Peninsula acquisition; PENN for the Harrah’s St. Louis acquisition; CHDN for the Riverwalk Casino acquisition. 3. 3/31/13 TTM pro forma Revenue includes $62M Baton Rogue annualization increment adjustment 4. For a reconciliation of these non-GAAP financial measures, please see the Appendix at the end of this presentation. Pro forma Consolidated Adjusted EBITDA represents the sum of each company’s reported TTM at 3/31/13 Consolidated Adj. EBITDA plus $40M of synergies and $10.5M Baton Rouge annualization increment adjustment. Pro forma Consolidated Adjusted EBITDA does not reflect the removal of Adjusted EBITDA from Lumiere Place Casino and Hotels. In the TTM period ended 3/31/13, the net revenues and Adjusted EBITDA for Pinnacle’s St. Louis segment were $389.4M and $98M, respectively. In the TTM period ended 3/31/13, Lumiere Place Casino and Hotels generated net revenues and Adjusted EBITDA of $190.7M and $34.3M, respectively, comprising 49% and 35% of the St. Louis segment results, respectively. Growth rate represents percent increase of pro forma from Pinnacle stand-alone operations. 1 1 102% growth 140% growth |
Significant Discretionary Cash Flow Accretion 23 • Transaction increases discretionary cash flow generation to fund debt repayment and leverage reduction Combination is expected to add more than $190M in annual discretionary cash flow Total annual pro forma discretionary cash flow is expected to increase to approximately $315M 1. For a detailed calculation of Pinnacle Stand-alone and pro forma Combined Company Discretionary Cash Flow, please see the Appendix at the end of this presentation. 160% growth +$194M $314.7 $121.2 $350 $300 $250 $200 $150 $100 $50 $- PNK TTM 3/31/13 (Stand-alone) Pro Forma TTM 3/31/13 Discretionary Cash Flow Generation¹ ($M) |
Enhanced Free Cash Flow Generation 24 Pinnacle’s credit profile will improve from: (1) repayment of Term Loan B with regulatory asset sale proceeds, and (2) utilization of enhanced cash flow stream to repay debt and reduce leverage 1. River Downs budget of $209M excludes capitalized interest, original acquisition cost of $45M and state gaming license fees of $50M • Elimination of Lake Charles growth cap ex reduces burden on the combined company’s pro forma TTM at 3/31/13 discretionary cash flow of $315M • Post asset divestitures, the Company’s growth cap ex commitments will be limited to only two growth projects: River Downs, $209M total spend ($7.5M incurred through 3/31/13)¹ New Orleans hotel growth cap ex spend of $20M • Merger synergies and lower cost of capital should benefit pro forma cash flow generation • NOLs and other tax assets are expected to reduce Federal cash taxes, enhance cash flow generation, and hasten balance sheet deleveraging |
25 • Pinnacle expects to generate at least $40M of annual synergies Clearly Identified Synergies Corporate departments: $40M of annual synergies Public Company Costs Named Executive Officers Marketing IT HR Accounting/ Tax Planning and Analysis Strategic Sourcing Internal Audit Legal/ Compliance Government and Public Affairs Design and Construction Corporate Operations Support Administration Property/ Regional Operations Board of Directors (outside) |
Substantial Additional Cash Flow From Tax Attributes 26 • Pinnacle currently has meaningful tax assets that will be utilized to offset taxable income for a multi-year period Pinnacle’s current base Federal NOL is approximately $271M Federal NOL is expected to increase by approximately $241M upon completion of Atlantic City land disposition Ameristar has taxable income reductions related to goodwill amortization for its Kansas City and East Chicago properties Potential additional NOL creation from required regulatory asset divestitures in St. Louis and Lake Charles |
Other Recent Developments 27 Land Sales Activity In the process of selling 20 acres of land in Atlantic City Transaction is expected to close by the end of 3Q13 for approximately $30.6M of net proceeds AC land sale is expected to crystalize an additional Federal NOL of approximately $241M Marketing excess land in Reno, NV and committed to selling Ameristar’s land in Springfield, MA Development Activity Focused on hotel cap ex spend for River City property – which is on time and on budget 1,600 space parking deck opened in November 2012 Event Center opened in June 2013 200-room hotel expected to open in September 2013 Construction of new $20M New Orleans hotel began in 1Q13; expected completion in late- 2Q14 ACDL has completed two $30M capital raises since December 2012, neither of which Pinnacle participated in; Phase 1 resort expected to open in late July 2013 |
28 Financial Overview |
29 1Q Net Revenue 1Q Net Revenue 1Q Cons. Adj. EBITDA ¹ 1Q Cons. Adj. EBITDA ¹ Cons. Adj. EBITDA Margin ¹ Cons. Adj. EBITDA Margin ¹ 1Q Net Revenue 1Q Net Revenue 1Q Cons. Adj. EBITDA ¹ 1Q Cons. Adj. EBITDA ¹ Cons. Adj. EBITDA Margin ¹ Cons. Adj. EBITDA Margin ¹ 1Q13 Results Source: Company documents and filings 1. For a reconciliation of non-GAAP financial measures, please see the Appendix at the end of this presentation. Note: Historic financial data does not give effect to the anticipated divestitures of Lumiere Place Casino and Hotels and Ameristar’s Lake Charles development project |
Summary Operating Performance 30 Total Revenues 1 ($M) Total Revenues 1 ($M) Consolidated Adjusted EBITDA 2 ($M) Consolidated Adjusted EBITDA 2 ($M) Capital Expenditures 3 ($M) Capital Expenditures 3 ($M) 15.6% 17.0% 20.2% 22.1% 23.8% 23.4% 27.8% PNK Pro Forma PNK Pro Forma PNK Pro Forma $979 $949 $1,059 $1,141 $1,197 $1,217 $2,457 2008 2009 2010 2011 2012 TTM 3/31/13 PF TTM 3/31/13 $153 $161 $214 $252 $285 $285 $683 2008 2009 2010 2011 2012 TTM 3/31/13 PF TTM 3/31/13 $306 $226 $158 $154 $300 $273 $424 2008 2009 2010 2011 2012 TTM 3/31/13 PF TTM 3/31/13 Source: Company Reports and SEC Filings 1. Pro forma combined company net revenue adjusted for $62M Baton Rouge annualization increment adjustment. 2. For a reconciliation of non-GAAP financial measures, please see the Appendix at the end of this presentation. Pro forma Consolidated Adjusted EBITDA represents the sum of each company’s reported TTM at 3/31/13 Consolidated Adj. EBITDA plus $40M of synergies and $10.5M Baton Rouge annualization increment adjustment. Pro forma Consolidated Adjusted EBITDA does not reflect the removal of Adjusted EBITDA from Lumiere Place Casino and Hotels. In the TTM period ended 3/31/13, the net revenues and Adjusted EBITDA for Pinnacle’s St. Louis segment were $389.4M and $98M, respectively. In the TTM period ended 3/31/13, Lumiere Place Casino and Hotels generated net revenues and Adjusted EBITDA of $190.7M and $34.3M, respectively, comprising 49% and 35% of the St. Louis segment results, respectively. 3. Represents reported total capital expenditures. Pro forma represents the sum of Pinnacle and Ameristar total reported capital expenditures. |
Historical & Pro Forma Covenant Levels 31 Total Leverage Ratio Total Leverage Ratio Senior Secured Leverage Ratio Senior Secured Leverage Ratio Interest Coverage Ratio¹ Interest Coverage Ratio¹ 1. Excludes synergies in calculation for pro forma Pinnacle Note: Historic and Pro forma leverage and coverage statistics do not give effect to proceeds from the anticipated divestiture of Lumiere Place Casino and Hotels or Ameristar’s Lake Charles development project. Divestiture Proceeds Divestiture Proceeds Net asset sales proceeds will be used to repay debt and reduce PF leverage Specifically, net asset sales proceeds will be used to repay Term Loan B, thereby reducing PF total and sr. secured leverage. PF interest coverage will benefit from debt pay down with net asset sales proceeds |
Key Conclusions 32 Transformative Transaction with Increased Scale and Diversity Seamless Integration and Meaningful Synergies Proven Management Team Implementing Best Practices Strong Cash Flow Profile Drives Debt Repayment and Leverage Reduction Long-Term Value Creation Opportunities |
33 Syndication Update |
Summary Indicative Terms and Conditions 34 Summary indicative terms and conditions Borrower Pinnacle Entertainment, Inc. (the “Company” or the “Borrower”) Facility Facility Size Maturity Revolver Term Loan $1,000 million $1,600 million 5 years 7 years Expected ratings Corporate: B1/BB- Facility: Ba1/BB+ Security Perfected first priority security interest in substantially all of tangible and intangible assets (including capital stock) of the Borrower and Guarantors, subject to certain exceptions Amortization TLB: 1% per annum in equal quarterly installments, with remainder at maturity Call premium 101 soft call for twelve months Financial covenants Financial covenants will apply to RC only (TLB is covenant-lite): • Maximum Consolidated Senior Secured Debt Ratio • Maximum Consolidated Total Leverage Ratio • Minimum Consolidated Interest Coverage Ratio Mandatory prepayments • 100% of the net cash proceeds of any sale, issuance or incurrence of indebtedness by the Borrower (other than permitted indebtedness) • 100% of the net cash proceeds of any sale or other disposition (including insurance proceeds and condemnation awards) by the Borrower or any of its restricted subsidiaries of any assets subject to customary exceptions and reinvestment rights • 50% of excess cash flow Use of proceeds Fund the aggregate cash consideration for the acquisition of Ameristar Casinos, Inc., repay existing indebtedness subject to certain exceptions, refinance its existing credit facilities, pay related transaction fees and expenses, redeem its existing 8.625% senior notes due 2017 and provide working capital and funds for general corporate purposes after the acquisition |
Transaction timetable 35 Week of Term Loan B July 15 • Lender meeting (July 16 ) July 29th • Commitments due from lenders (July 29 ) • Allocate term loan August • Close transaction Denotes bank holiday Financing key date th th th July 2013 August 2013 S M T W T F S S M T W T F S 1 2 3 4 5 6 1 2 3 7 8 9 10 11 12 13 4 5 6 7 8 9 10 14 15 16 17 18 19 20 11 12 13 14 15 16 17 21 22 23 24 25 26 27 18 19 20 21 22 23 24 28 29 30 31 25 26 27 28 29 30 31 |
36 Appendix |
Gaming Portfolio Overview 37 Source: Per company SEC filings as of 3/31/13 Note: Historic and pro forma statistics and financial data do not give effect to the anticipated divestitures of Lumiere Place Casino and Hotels and Ameristar’s Lake Charles development project. River City and Lumiere Place Casino and Hotels financial data is presented in the St. Louis segment report format. In the trailing twelve month period ended March 31, 2013, Lumiere Place Casino and Hotels generated Net Revenues and Adjusted EBITDA of $190.7M and $34.3M, respectively, comprising 49% and 35% of the St. Louis segment results, respectively. State Location Property Market Slots Tables No. of gaming positions Rooms LTM Revenue ($M) LTM EBITDA ($M) % Margin Belterra Belterra, IN 1,416 53 1,734 608 $152.9 $30.4 19.9% Ameristar Casino Hotel (East Chicago) East Chicago, IN 1,970 36 2,186 288 206.8 37.0 17.9% Boomtown Casino (New Orleans) New Orleans, LA 1,288 39 1,522 0 120.1 37.3 31.1% L'Auberge Casino (Resort Lake Charles) Lake Charles, LA 1,616 75 2,066 205 377.3 112.7 29.9% L'Auberge Casino (Baton Rouge) Baton Rouge, LA 1,480 56 1,816 187 84.6 10.0 11.8% Boomtown Casino and Hotel (Bossier City) Bossier City, LA 999 25 1,149 494 79.4 17.8 22.4% Lumière Place Casino & hotels St. Louis, MO 2,004 68 2,412 494 River City Casino St. Louis, MO 2,018 62 2,390 0 Ameristar Casino Resort Spa (St. Charles) St. Charles, MO 2,620 72 3,052 397 266.4 93.8 35.2% Ameristar Casino Hotel (Kansas City) Kansas City, MO 2,590 72 3,022 184 207.4 73.5 35.4% Iowa Ameristar Casino Hotel (Council Bluffs) Council Bluffs, IA 1,590 23 1,728 444 164.3 67.7 41.2% Mississippi Ameristar Casino Hotel (Vicksburg) Vicksburg, MS 1,570 41 1,816 149 117.7 53.5 45.4% Colorado Ameristar Casino Hotel (Black Hawk) Black Hawk, CO 1,490 47 1,772 536 159.2 57.7 36.2% Nevada The Jackpot Properties Jackpot, NV 780 26 936 416 56.3 16.2 28.8% Ohio River Downs Cincinnati, OH 11.8 (1.3) NM 98.0 389.4 25.2% Indiana Louisiana Missouri Kansas City Vicksburg East Chicago Black Hawk |
38 Boomtown New Orleans Bossier City Lumière Place Atlantic City Property¹ Pinnacle Entertainment, Inc. (Public Co. / Debt Issuer) Pinnacle Stockholders L'Auberge Lake Charles Casino Resort River Downs Racetrack Hotel Lumière L'Auberge Baton Rouge Casino Magic, LLC River City Belterra Casino Resort Cactus Pete’s Inc. Ameristar Casino Council Bluffs, Inc. Ameristar Casino Kansas City, Inc. Ameristar East Chicago Holdings, LLC Ameristar Casinos Financing Corp. Ameristar Casino St. Louis, Inc. Ameristar Casino East Chicago, LLC Ameristar Casino Lake Charles, LLC Ameristar Casino Vicksburg, Inc. Ameristar Casino St. Charles, Inc. Ameristar Casino Black Hawk, Inc. Ameristar Lake Charles Holdings, LLC Ameristar Casino Las Vegas, Inc. PNK (SAM) LLC² PNK Development 7 / HPT Stockholders Borrower Entity Non-Borrower Entity 100% Owner Interests in Vietnam Venture and Other Assets PNK Development 11 Pinnacle Unrestricted Subsidiaries Interest in Retama Park Racetrack 1. Pinnacle’s Atlantic City Property is held in unrestricted subsidies under the Credit Agreement 2. Management company that manages Retama Park Racetrack $1,000M Revolver $1,600M Term Loan B Existing ASCA 7.5% Senior Unsecured Notes due 2021 Existing PNK 8.75% Senior Subordinated Notes due 2020 Existing PNK 7.75% Senior Subordinated Notes due 2022 Pinnacle Assets Restricted Subsidiaries Pro forma Organizational Structure Ameristar Casino Springfield, LLC. |
Pinnacle Consolidated Adjusted EBITDA Reconciliation 39 PINNACLE ENTERTAINMENT: RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS TO CONSOLIDATED ADJUSTED EBITDA Trailing 12-month period ended (Dollars in Thousands) June 30, 2012 September 30, 2012 December 31, 2012 March 31, 2013 March 31, 2013 Income (Loss) From Continuing Operations 12,943 6,757 (42,013) (85,346) (107,659) Income Tax Expense (Benefit) 2,150 1,962 974 611 5,697 Interest Expense, Net of Interest Income and Capitalized Interest 22,485 22,960 26,324 28,670 100,439 Loss on Equity Method Investment 1,244 1,367 26,574 92,181 121,366 Depreciation and Amortization 26,201 27,562 35,685 28,002 117,450 Write-downs, Reserves and Recoveries, net 788 103 10,919 314 12,124 Non-Cash Share Based Compensation 3,155 1,859 1,728 1,914 8,656 Pre-opening and Development Costs 4,212 11,546 3,117 7,561 26,436 Consolidated Adjusted EBITDA 73,178 74,116 63,308 73,907 284,509 Income (Loss) From Continuing Operations Margin 4.3% 2.2% -13.9% -27.3% -8.8% Consolidated Adjusted EBITDA Margin 24.5% 24.4% 21.0% 23.6% 23.4% Source: Pinnacle Entertainment SEC Filings For the three months ended, |
Ameristar Adjusted EBITDA Reconciliation 40 AMERISTAR CASINOS: RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA Trailing 12-month period ended (Dollars in Thousands) June 30, 2012 September 30, 2012 December 31, 2012 March 31, 2013 March 31, 2013 GAAP Net Income 17,622 16,131 1,215 17,978 52,946 Income Tax Provision 12,480 11,612 1,898 11,441 37,431 Interest Expense, Net of Capitalized Interest 28,821 29,652 29,383 28,634 116,490 Interest Income (12) (7) (5) (3) (27) Other 112 - - - 112 Net Loss (gain) on disposition of assets 550 (28) 208 (9) 721 Impairment of Fixed Assets - - 9,563 23 9,586 Depreciation and Amortization 26,999 27,036 25,761 25,147 104,943 Stock Based Compensation 3,650 3,738 5,505 3,752 16,645 Non-operational Professional Fees & Merger related Costs - - 6,669 2,175 8,844 Non-Capitalizable Lake Charles Development Costs - - 193 512 705 Deferred Compensation Plan Expense 124 - - - 124 Net River Flooding (reimbursements) expenses (189) - - - (189) Adjusted EBITDA 90,157 88,134 80,390 89,650 348,331 Net Income Margin 5.9% 5.4% 0.4% 6.1% 4.5% Adjusted EBITDA Margin 30.4% 29.6% 27.8% 30.4% 29.6% Source: Ameristar Casinos SEC Filings For the three months ended, |
Pro forma Consolidated Adjusted EBITDA Reconciliation 41 PRO FORMA COMBINED COMPANY CONSOLIDATED ADJUSTED EBITDA WITH SYNERGIES AND BATON ROUGE ANNUALIZATION TTM at 3/31/2013 Pro forma Combined Company (Dollars in Thousands) Consolidated Adj. EBITDA Pinnacle Entertainment TTM at 3/31/13 Consolidated Adj. EBITDA (a) 284,509 Ameristar Casinos TTM at 3/31/13 Consolidated Adj. EBITDA (a) 348,331 Plus: Expected Merger Synergies (b) 40,000 Plus: Baton Rouge Adjusted EBITDA Annualization Increment (c) 10,486 Combined Company Pro forma Consolidated Adjusted EBITDA 683,326 Source: Pinnacle Entertainment and Ameristar Casinos SEC Filings and Company Estimates. (a) Represents company reported Consolidated Adjusted EBITDA for the trailing twelve month period ended March 31, 2013. Pinnacle's Consolidated Adjusted EBITDA is not adjusted for Lumiere Place Casino and Hotels. In the trailing twelve month period ended March 31, 2013, the net revenues and Adjusted EBITDA for Pinnacle's St. Louis segment were $389.4 million and $98 million, respectively. In the trailing twelve month period ended March 31, 2013, the net revenues and Adjusted EBITDA for Lumiere Place Casino and Hotels was $190.7 million and $34.3 million, respectively, comprising 49% and 35% of the St. Louis segment results, respectively. (b) Estimated $40 million of annual synergies expected to be generated by the combination of Pinnacle Entertainment and Ameristar Casinos, as estimated by Pinnacle Entertainment management. (c) Represents the adjustment required to annualize the partial year Adjusted EBITDA operating performance of Pinnacle Entertainment's new L'Auberge Baton Rouge property. This calaculation is based upon the property's 2013 first quarter Adjusted EBITDA of $5.1 million times four, minus trailing twelve months through March 31, 2013 reported Adjusted EBITDA of $10 million. |
Pro forma Discretionary Cash Flow Calculation 42 PINNACLE ENTERTAINMENT STAND ALONE DISCRETIONARY CASH FLOW CALCULATION TTM at 3/31/2013 Pinnacle Entertainment (Dollars in Thousands) Discretionary Cash Flow Consolidated Adjusted EBITDA at 3/31/13 (a) 284,509 Less: Interest Expense, before Capitalized Interest (b) (116,700) Less: Cash Paid for Income Taxes (c) (3,546) Less: Maintenance Capital Expensitures (d) (43,100) Combined Company Pro forma Discretionary Cash Flow 121,163 Source: Pinnacle Entertainment SEC Filings. (a) Represents Pinnacle Entertainment's reported Consolidated Adjusted EBITDA for the trailing twelve month period ended March 31, 2013. In the trailing twelve month period ended March 31, 2013, the net revenues and Adjusted EBITDA for Lumiere Place Casino and Hotels was $190.7 million and $34.3 million, respectively, comprising 49% and 35% of the St. Louis segment results, respectively. (b) Based upon the combined company's expected pro forma capital structure. The profma capital structure is not adjusted for proceeds from regulatory asset divestitures in St. Louis and Lake Charles. (c) Estimated combined company cash taxes relate principally to state level income taxes. Federal cash taxes are expected to be limited by the combined company's substantial Federal NOL carry forwards. (d) Represents Pinnacle Entertainment's TTM at 3/31/13 total capital capital expenditures, minus capital spending on growth projects (River Downs and L'Auberge Baton Rouge). |
Pro forma Discretionary Cash Flow Calculation 43 COMBINED COMPANY PRO FORMA DISCRETIONARY CASH FLOW CALCULATION TTM at 3/31/2013 Pro forma Combined Company (Dollars in Thousands) Discretionary Cash Flow Combined Company Pro forma Consolidated Adjusted EBITDA at 3/31/13 (a) 683,326 Less: Pro forma Cash Interest Expense (b) (267,385) Less: Pro forma Combined Company Cash Taxes (c) (4,800) Less: Pro forma Maintenance Capital Expenditures (d) (96,400) Combined Company Pro forma Discretionary Cash Flow 314,741 Source: Pinnacle Entertainment and Ameristar Casinos SEC Filings. (a) Represents the sum of each company's reported Consolidated Adjusted EBITDA for the trailing twelve month period ended March 31, 2013, plus $40 million of expected synergies, $10.5 million Baton Rouge Adjusted EBITDA annualization increment. Pinnacle's Consolidated Adjusted EBITDA is not adjusted for Lumiere Place Casino and Hotels. In the trailing twelve month period ended March 31, 2013, the net revenues and Adjusted EBITDA for Lumiere Place Casino and Hotels was $190.7 million and $34.3 million, respectively, comprising 49% and 35% of St. Louis segment results, resoectively. (b) Based upon the combined company's expected pro forma capital structure. The profma capital structure is not adjusted for proceeds from regulatory asset divestitures in St. Louis and Lake Charles. (c) Estimated combined company cash taxes relate principally to state level income taxes. Federal cash taxes are expected to be limited by the combined company's substantial Federal NOL carry forwards. (d) Represents the sum of Pinnacle Entertainment and Ameristar Casinos TTM at 3/31/13 total capital capital expenditures, minus capital spending on growth projects (Lake Charles, River Downs and L'Auberge Baton Rouge). Ameristar Casinos total capital expenditures are further adjusted for one-time, non-recurring expenditures related to the Vicksburg site stabilization project of $5.1 million and a $9.3 million charge related to St. Charles hotel construction litigation |