Pinnacle Entertainment’s Acquisition of Ameristar Casinos December 21, 2012 Exhibit 99.2 |
Safe Harbor/Non-GAAP Financial Disclosures 2 Forward-Looking Statements This press release 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, earnings per share 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, 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; (b) the ability and timing to obtain required regulatory approvals (including approval from gaming regulators) and satisfy or waive other closing conditions; (c) the ability to obtain the approval of Ameristar’s stockholders; (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) the requirement to satisfy closing conditions to the merger as set forth in the merger agreement, including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976; (h) uncertainties in the global economy and credit markets and its potential impact on Pinnacle’s ability to finance the transaction; (i) the outcome of any legal proceedings that may be instituted in connection with the transaction; (j) the ability to retain certain key employees of Ameristar; (k) 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; (l) Pinnacle’s ability to obtain financing on the terms expected, or at all; and (m) the risk factors disclosed in Pinnacle’s most recent Annual Report on Form 10-K/A, which Pinnacle filed with the Securities and Exchange Commission on May 16, 2012 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, 2012,3 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, 2011. 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. Non-GAAP Financial Measures As used in this presentation, Consolidated Adjusted EBITDA, Consolidated Adjusted EBITDA margin, Free Cash Flow and Adjusted EBITDA 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 Free Cash Flow as Consolidated Adjusted EBITDA less maintenance capital expenditures, cash taxes and cash 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 September 30, 2012, taking into account synergies Pinnacle expects to achieve. |
Transformative Transaction 3 • Combines two best in market and complementary asset portfolios • Enhanced geographical and financial diversification • Increased scale and distribution • Accretive to EPS and free cash flow, following the closing • Combination expected to drive at least $40 million of annual synergies • Significant margin opportunities by applying each company’s best practices across combined enterprise • Shared culture of operational excellence, including a focus on guest experience and team members Transformative transaction creates a best in class gaming platform Transformative transaction creates a best in class gaming platform |
Transaction Overview Per Share Consideration $26.50 in cash per ASCA share 45% premium over the average closing price of ASCA shares for the 90 days ending 12/20/12 Enterprise Value $2.8 billion, reflecting $1.9 billion debt and $116 million cash on hand (9/30/12) Ameristar Valuation 7.6x LTM Adjusted EBITDA (excluding synergies) Sources of Financing Committed debt financing Approval Process Approval by ASCA shareholders Regulatory approvals Expected Closing By the end of 3Q13, subject to customary closing conditions 4 |
Ameristar Current Operations 5 |
Ameristar Profile 6 Ameristar Stand-Alone Adjusted EBITDA and Margin Performance ($M) Ameristar Stand-Alone Adjusted EBITDA and Margin Performance ($M) Ameristar Adjusted EBITDA Margin vs. Peers (LTM at 9/30/12) Ameristar Adjusted EBITDA Margin vs. Peers (LTM at 9/30/12) Source: Company documents and filings Notes: 1. Pro Forma for Harrah’s St. Louis acquisition; excls. $19.2 million of Maryland lobbying expenses 2. Pro Forma for the Peninsula acquisition 3. LTM as of October 28, 2012 307.1 346.5 323.5 365.1 364.5 24.2% 28.5% 27.2% 30.1% 30.3% 22% 24% 26% 28% 30% 32% 34% 36% 200 220 240 260 280 300 320 340 360 380 400 2008 2009 2010 2011 LTM at 9/30/2012 30.3% 28.7% 25.7% 24.3% 22.7% 21.0% 10% 15% 20% 25% 30% 35% ASCA stand-alone PENN (1) Peer Average PNK stand- alone BYD (2) ISLE (3) |
Merging of Two Great Companies 7 • 8 properties, plus one under development • ~2,400 rooms • ~12,700 slot machines • ~320 table games • ~7,200 team members • LTM Net Revenues of $1.2 billion • 9 properties, including two race tracks • ~2,600 rooms • ~10,800 slot machines • ~320 table games • ~8,700 team members • LTM Net Revenues of $1.2 billion Pro Forma Combined A leading gaming company in the U.S. Combined LTM Revenues of $2.4 billion Combined LTM Adjusted EBITDA of $689 million, including $40 million of synergies 17 properties in 13 distinct geographies ~5,000 rooms ~23,500 slot machines ~640 table games |
Enhances Footprint in Attractive Markets 8 |
Diversified Revenue Platform 9 • Significantly de-risks portfolio by doubling gaming markets of operation from 6 to 12 • Balanced portfolio decreases Pro Forma revenue reliance on two largest gaming markets by 23 percentage points Pinnacle LTM 9/30/12 Net Revenue Diversification Pinnacle LTM 9/30/12 Net Revenue Diversification Pro Forma Net Revenue Diversification Pro Forma Net Revenue Diversification Lake Charles, 33.3% St. Louis, 33.5% New Orleans, 10.6% So. Indiana / Cincinnati, 14.5% Bossier City, 7.0% Baton Rouge, 1.1% St. Louis, 27.9% Lake Charles, 16.4% Kansas City, 9.1% Greater Chicago, 9.0% So. Indiana / Cincinnati, 7.1% Council Bluffs, 7.0% Black Hawk, 6.7% New Orleans, 5.2% Vicksburg, 5.1% Bossier City, 3.5% Nevada Regional, 2.5% Baton Rouge, 0.6% |
EBITDA Pro Forma Financials 10 Notes: 1. Pro Forma represents the sum of Pinnacle and Ameristar's reported LTM at 9/30/2012 Combined Adjusted EBITDA plus $40 million of expected synergies 2. 2008 through LTM 9/30/2012 data represents PNK stand-alone Consolidated Adjusted EBITDA Pinnacle Historic Consolidated Adj. EBITDA and Combined Adj. EBITDA ($ In Millions) Pinnacle Historic Consolidated Adj. EBITDA and Combined Adj. EBITDA ($ In Millions) 157.2 163.2 213.6 252.1 284.1 688.8 0 100 200 300 400 500 600 700 800 2008 2009 2010 2011 LTM at 9/30/2012 Pro Forma incl. Synergies (1) Consolidated Adj. EBITDA (1,2) |
Enhanced Scale 11 Notes: 1. LTM as of 9/30/2012 2. Pro Forma for the acquisition of Harrah’s St. Louis; EBITDA excls. $19.2 million of Maryland lobbying expenses 3. Represents the sum of Pinnacle and Ameristar's LTM at 9/30/2012 results. Combined Adjusted EBITDA includes $40 million of synergies 4. Pro Forma for the Peninsula acquisition 5. LTM as of October 28, 2012 Source: Company documents and filings Net Revenue, $ in Million 1 Net Revenue, $ in Million 1 EBITDA, $ in Millions 1 EBITDA, $ in Millions 1 2,832 2,642 2,374 1,203 1,171 968 778 0 500 1,000 1,500 2,000 2,500 3,000 PENN (2) BYD (4) PNK + ASCA (3) ASCA PNK ISLE (5) CHDN 813 689 601 364 284 204 172 0 200 400 600 800 1,000 PENN (2) PNK + ASCA (3) BYD (4) ASCA PNK ISLE (5) CHDN |
Earnings and Cash Flow Accretion 12 • Increases free cash flow generation to fund growth projects and accelerate future leverage reduction • Adds more than $150 million in annual free cash flow • Total annual free cash flow increases to approximately $285 million $2.25 $4.84 16.8% 36.2% 0% 6% 12% 18% 24% 30% 36% 42% $- $1 $2 $3 $4 $5 $6 PNK stand-alone LTM at 9/30/12 Pro Forma (3) Free Cash Flow Per Share (LHS) (1,4) Free Cash Flow Per Share / Share Price Yield (RHS) (2,4) Notes: 1. Free cash flow defined as trailing 12-month Combined Adjusted EBITDA less maintenance cap ex, cash taxes and cash interest expense 2. Free cash flow yield is based upon PNK closing stock price on 12/20/12 3. Pro Forma represents the addition of Pinnacle and Ameristar free cash flow, as defined in note 1, plus additional cash interest expense from new debt and the impact of $40 million of synergies Pinnacle expects to achieve 4. Based upon a fully diluted PNK share count of 59.4 million |
Attractive Margin Opportunity 13 • 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 EBITDA Margins; +470 bps vs. PNK’s Stand-Alone LTM Combination With Ameristar Is Significantly Accretive To Pinnacle’s EBITDA Margins; +470 bps vs. PNK’s Stand-Alone LTM Notes: 16.8% 17.2% 20.2% 22.1% 24.3% 29.0% 0% 5% 10% 15% 20% 25% 30% 35% 2008 2009 2010 2011 LTM at 9/30/2012 Pro Forma incl. Synergies (1) Consolidated Adj. EBITDA Margin (1,2) 1. Pro Forma represents the sum of Pinnacle and Ameristar's reported LTM at 9/30/2012 Combined Adjusted EBITDA plus $40 million of expected synergies, divided by the sum of Pinnacle and Ameristar's LTM at 9/30/2012 Net Revenue 2. 2008 through LTM 9/30/2012 data represents PNK stand-alone Consolidated Adjusted EBITDA margin |
Financing Overview 14 • Fully committed debt financing • New debt financing will mainly consist of pre-payable bank debt • Near- to medium-term focus will be on integration and reducing leverage • Ample liquidity profile to fulfill combined company’s obligations Sources Amount % Uses Amount % Bank Debt $1,995 45% Purchase Ameristar Equity @ $26.50 $959 21% Existing Ameristar Bonds 1,040 23% Assume Existing Ameristar Bonds 1,040 23% Existing Pinnacle Bonds 1,125 25% Assume Existing Pinnacle Bonds 1,125 25% Other Debt 315 7% Refinance Ameristar and Pinnacle Bank Debt 1,201 27% Estimated fees and expenses 150 3% Total Sources $4,475 100 % Total Uses $4,475 100% Estimated Sources & Uses ($ in Millions) |
Synergies and Integration Strategy 15 • Synergies of at least $40 million annually Efficiencies of scale Margin opportunities from applying best practices of both companies across the combined enterprise Redundant public company expenses Purchasing power and supply chain management • Integration Plan “Best in class”: Jointly developed integration plan, with best practices taken from both companies and applied across the enterprise Seamless: During integration, focused on continuing to operate all properties with no impact on guest experience or operational performance |
Strategically Compelling Transaction 16 • Delivers lasting value to shareholders • Increased operational and geographical diversification • Strong fit with Pinnacle’s business strategy, operational philosophy and culture • Accretive to EPS and free cash flow, following the closing • Meaningful synergies and efficiencies of scale Transformative transaction creates a best in class gaming platform Transformative transaction creates a best in class gaming platform |
Additional Information/Participants in the Solicitation 17 Additional information and Where to Find It In connection with the proposed merger, Ameristar plans to file a proxy statement with the SEC and mail the proxy statement to its stockholders. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PINNACLE, AMERISTAR, THE PROPOSED MERGER AND RELATED MATTERS. The proxy statement, as well as other filings containing information about Pinnacle and Ameristar will be available, free of charge, from the SEC’s web site (www.sec.gov). Pinnacle’s SEC filings in connection with the transaction also may be obtained, free of charge, from Pinnacle’s web site (www.pnkinc.com) under the tab “Investor Relations” and then under the heading “SEC Filings,” or by directing a request to Pinnacle, 8918 Spanish Ridge Ave., Las Vegas, Nevada, 89148, Attention: Investor Relations or (702) 541-7777. Ameristar’s SEC filings in connection with the transaction also may be obtained, free of charge, from Ameristar’s web site (www.ameristar.com) under the tab “About Us,” “Investor Relations” and then under the heading “Ameristar SEC Reports & Filings,” or by directing a request to Ameristar, 3773 Howard Hughes Parkway, Suite 490 South, Las Vegas, Nevada, 89169, Attention: Investor Relations or (702) 567-7000. Participants in the Merger Solicitation Pinnacle and Ameristar and their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in connection with the proposed merger. Information about Pinnacle’s directors and executive officers is included in Pinnacle’s Annual Report on Form 10-K/A for the year ended December 31, 2011, filed with the SEC on May 16, 2012 and the proxy statement for Pinnacle’s 2012 Annual Meeting of Stockholders, filed with the SEC on April 9, 2012. Information about Ameristar’s directors and executive officers is included in Ameristar’s Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on February 28, 2012 and the proxy statement for Ameristar’s 2012 Annual Meeting of Stockholders, filed with the SEC on April 30, 2012. Additional information regarding these persons and their interests in the merger will be included in the proxy statement relating to the merger when it is filed with the SEC. These documents can be obtained free of charge from the sources indicated above. |