Fitch: Pinnacle/Ameristar Merger Highlights Emerging Trends in Regional
NEW YORK -- March 22, 2013
The pending merger of Pinnacle Entertainment, Inc. and Ameristar Casinos, Inc.
highlights trends in the regulatory and market environments in the gaming
jurisdictions of Indiana, Louisiana, Missouri, Ohio and Texas, according to
Fitch Ratings' new 'Eye in the Sky' series of reports.
In particular, legislation related to potential state gaming expansion and any
fallout related to recent anti-trust concerns are trends that Fitch believes
investors are watching closely.
"It is an important time for investors to understand the regulatory and market
dynamics of these five jurisdictions as Pinnacle seeks consent from Ameristar
noteholders to waive and/or amend certain restrictive covenants, which would
result in a more favorable pro forma capital structure for Pinnacle," says
Michael Paladino, head of gaming, lodging and leisure ratings at Fitch. "At
some point in the coming months following regulatory hurdle clearance and the
expiration of consent solicitation, which was extended to March, 27, 2012,
investors will subsequently consider a proposed merger financing transaction."
The expansion of gaming could shift the current competitive landscape among
casinos. Legalization of casino gaming in Texas, though unlikely, would add
pressure to the already-competitive Louisiana market, where Pinnacle owns four
properties and would have a fifth under development if it completes the
Ameristar acquisition. The Indiana market would be similarly affected by
gaming expansion in Illinois, Ohio or Kentucky.
However, in states with a limited number of gaming licenses like Missouri, the
merger may force Pinnacle to divest of one of its casinos.
"Recent anti-trust concerns around the merger may be related to the St. Louis
market, where the combined company would own three of the six properties
accounting for close to 60% of gaming revenues," notes Alex Bumazhny, director
at Fitch. "Lumiere Place would be a likely candidate for divestiture, in our
The 'Eye in the Sky: Gaming Jurisdiction Surveillance Monitor' is a series of
reports that provide an overview and detailed analysis of the regulatory
trends and current market environment in gaming jurisdictions.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research Eye in the Sky Series: Ohio -- Gaming
Jurisdiction Surveillance Monitor
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Brian Bertsch, +1-212-908-0549
Alyssa Castelli, +1-212-908-0540
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