Century Casinos Announces Letter of Intent for Second South African Casino
COLORADO SPRINGS, CO, June 13, 2005. Century Casinos, Inc. announced today that its subsidiary, Century Casinos Africa (Pty) Ltd., entered into a letter of intent to acquire 60% of Balele Leisure (Pty) Ltd. ("Balele").
Balele holds a casino license from the South African province of Kwazulu Natal and currently operates a casino in a temporary location in Newcastle, South Africa, with 200 slot machines and seven table games. Plans are in place to develop a permanent facility at a more prominent site for 220 slot machines and nine table games, a small hotel as well as ancillary facilities.
The transaction would also give Century a long term agreement to manage the casino operations for a fee based on gross revenues and EBITDA.
The final purchase price for the 60% controlling interest depends on the permanent facility's gross gaming revenue in its first year of operation. Based on current projections, it will be in the range of 4 to 4.5 times estimated EBITDA.
Newcastle, with approximately 350,000 inhabitants, is situated half-way between Johannesburg and Durban in the northwestern portion of Kwazulu Natal, which is South Africa's most populous province with over 10 million people. Five casinos are operating in the province (including Balele's in Newcastle), which is the maximum allowed by law, with the two largest facilities in the Durban area.
"We are excited that, as a result of our successful operation of The Caledon Casino, Hotel & Spa resort in the Western Cape province, this opportunity presented itself to further expand our South African operations," said Peter Hoetzinger, Co-CEO and President of Century Casinos, Inc. "Given the strong economic climate and the growing popularity of casino gaming in South Africa, we look forward to closing this transaction soon, " he continued.
The transaction is subject to financial and legal due diligence, the negotiation and completion of final documentation as well as board and regulatory approvals.
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