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MGM Resorts, MGM Growth Properties To Buy Empire City Casino For $850 Mln

MGM Resorts International (MGM) and MGM Growth Properties LLC (MGP) said that MGM Resorts has agreed to acquire the real property and operations associated with the Empire City Casino's race track and casino in Yonkers, New York, for consideration of $850 million.

Further, MGM Resorts and MGP have entered into a definitive agreement whereby MGP will acquire the developed real property associated with Empire City from MGM Resorts and lease it back to a subsidiary of MGM Resorts, after which a subsidiary of MGM Resorts will operate the property.

The total consideration of $850 million includes the refinancing of Empire City's outstanding debt, which is expected to be about $245 million at the time of closing. MGM Resorts said it expects that about $260 million of the remaining consideration will be in the form of MGM Resorts common stock.

Furthermore, MGM Resorts has agreed to pay additional consideration of $50 million if Empire City is awarded a license for live table games on or prior to December 31, 2022 and MGM Resorts accepts such license by December 31, 2024.

The transactions are expected to close in the first quarter of 2019.

Jim Murren, Chairman and CEO of MGM Resorts International said, "This acquisition represents an excellent opportunity to further solidify our presence on the East Coast, and in particular, expand our reach into the high-density New York City region. We believe this transaction enhances our free cash flow profile and presents attractive future opportunities for the Company, and we look forward to welcoming the Empire City team and guests to the MGM Resorts family."

Subsequent to the purchase of Empire City, MGM Resorts and MGP have agreed that MGM Resorts will sell the developed real property to MGP for total consideration of about $625 million.

This will include the assumption of the about $245 million of debt refinanced by MGM Resorts, while the balance consideration will be through the issuance of operating partnership units to MGM Resorts based upon MGP's closing price of $29.38 as of May 25, 2018.

In addition, MGM Resorts has agreed to give MGP a right of first offer with respect to certain undeveloped land adjacent to the property to the extent MGM Resorts develops additional gaming facilities and chooses to sell or transfer the property in the future.

For the last twelve months ended March 31, 2018, Empire City reported about $230 million in net revenues and about $70 million in adjusted EBITDA.

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