Gateway To Merge With Leisure In $1.1bn Transaction

Gateway Casinos and Entertainment, through its GTWY Holdings Limited company, has reported a business combination with Leisure Acquisition Corp.

Leisure will combine into a wholly-owned subsidiary of GTWY in a deal with a pro forma enterprise value of approximately US$ 1,115 billion, with HG Vora Capital Management funding the merger through a US$ 30 million equity contribution.

Once the transaction is completed, Marc Falcone, currently Leisure’s ceo, will become Gateway’s president and chief executive officer.

Once this appointment is successful, Tony Santo, the current CEO of Gateway, will resign from the company but will continue for three months to assist with an orderly transition as an advisor to the board of directors and Falcone.

The deal was approved unanimously by both organisations ‘ board of directors and is expected to close in the second quarter of 2020, subject to approval by Leisure’s shareholders, appropriate regulatory approvals, contract approvals and registrations, including, but not limited to, Ontario Lottery and Gaming Corporation approvals, and other customary closing conditions. Falcone’s appointment as CEO of Gateway is subject to relevant conditions for gaming registration.

Together with the pending merger, both parties foresee sales of US$ 659.3 million and adjusted EBITDA of US$ 148.6 million for the year ending December 31, 2020, and US$ 707.8 million and US$ 163.9 million a year later respectively.

Gabriel de Alba, Catalyst’s managing director and partner and Gateway’s executive chairman, explained: “With its strong corporate and property operating teams, diversified growth initiatives, and industry-leading operating model, Gateway has built tremendous momentum and established a solid foundation for ongoing growth.

“We are proud of the team and their many accomplishments over the last six years which include doubling our locations and adjusted EBITDA, increasing our slot machines by nearly three-times, increasing our table games by over two-times and adding 56 new F&B outlets across British Columbia and Ontario.

“The disciplined execution of our near- and long-term strategies has created significant value and returns over the years for all of the company’s shareholders. We are thankful to Tony for his leadership of Gateway and his key role going forward.”

Adding: “As we seek to execute against our many growth initiatives and deliver additional shareholder value, we are excited to partner with Leisure and appreciative of the confidence in our future as demonstrated by HG Vora’s investment commitment. We welcome Marc to Gateway and look forward to his leadership as our incoming CEO.

“Lorne, Dan and Marc’s respective industry experience and extensive relationships, combined with access to public capital markets, will favourably position the company to accelerate its strategies to deliver strong, profitable growth and increased free cash flow.

“Just as importantly, this transaction will provide Gateway with the foundation for a very promising future as a leading, diversified gaming and entertainment platform throughout North America. The entire Gateway team looks forward to working with the team at Leisure to create value for shareholders over the long-term.”