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LAKE CHARLES, LA (KPLC) -
Pinnacle Entertainment is buying Ameristar Casinos for about $869 million, plus taking on its $1.9 billion in debt. Pinnacle is the company that owns L'Auberge Casino Resort.
A bird's eye view from the top floor of L'Auberge shows the Ameristar Casino construction underway. They've been driving pilings for a while now for a second casino resort.
But now Pinnacle Entertainment has announced it is acquiring Ameristar. Geno Iafrate is Pinnacle's Executive Vice President for Regional Operations.
"We're excited about our two companies being very complimentary to each other both from our strategic business focus, our geographic diversification and then really, how we think about our team members and our guests and our shareholders. Our cultures are so similar it just was a natural fit for us as we got to know Ameristar, really got to know them here in Lake Charles," said Iafrate.
Iafrate said construction will continue on what was to be Ameristar's project. Some of the local anticipation stemmed from was seen as the benefits of two companies trying to outdo each other. But he said they are still committed to opening in mid 2014.
"In 2010 when we canceled Sugar Cane Bay project, the world was very different. And it just wasn't prudent for us to bet that much of our company's future on a single project in Lake Charles. Well, this is a different deal. Our company is substantially bigger. Our existing assets are performing at a level much higher than it did 2 1/2 years ago and Ameristar is not a single bet on a single property in Lake Charles. It's an instant diversification of Pinnacle Entertainment. The combined company will have 17 properties in many jurisdictions," said Iafrate.
The value of the deal is an estimated $2.8 billion including debt and cash on hand.
Pinnacle's Director of Media Relations and Public Affairs, Kerry Andersen, also confirmed the Ameristar Casino project currently underway in Lake Charles will move forward.
"The acquisition allows us to leverage ownership of the two properties to create a terrific, integrated full-service casino resort complex to further promote Lake Charles as a gaming destination," Andersen said.
"L'Auberge has been a driving force in establishing Lake Charles as a gaming destination and the addition of another property will serve to strengthen and expand the market," said Andersen.
If approved by shareholders and regulators, the deal would more than double Pinnacle's casino and resort holdings to 17 in the United States.
Pinnacle will pay $26.50 for each share of Ameristar Casinos Inc. That's a 20 percent premium over the company's Thursday closing stock price of $22.07. The deal also includes $116 million in cash on hand as of Sept. 30.
The deal has been approved by the boards of both Las Vegas operators.
Pinnacle Entertainment Inc. says it expects the acquisition to result in cost savings of at least $40 million a year and boost the company's earnings after closing.
The following is the news release from Pinnacle Entertainment:
LAS VEGAS, Dec. 21, 2012 (GLOBE NEWSWIRE) -- Pinnacle Entertainment, Inc. (NYSE:PNK) and Ameristar Casinos, Inc. (Nasdaq:ASCA) announced today that the companies have entered into a definitive agreement under which Pinnacle will acquire all of the outstanding common shares of Ameristar for $26.50 per share in cash, for a total enterprise value of $2.8 billion, including debt of $1.9 billion and cash on hand of $116 million as of September 30, 2012. This consideration represents a premium of 45% over the average closing price of Ameristar common stock for the 90 days ended December 20, 2012. The transaction has received the unanimous approval of both the Ameristar and Pinnacle Boards of Directors.
Pinnacle will benefit from increased operational and geographic diversity by more than doubling in size to 17 operating properties in 13 distinct geographies. The acquisition of Ameristar's properties will complement Pinnacle's existing portfolio by adding eight casino-resorts in some of the nation's best gaming markets, including: St. Charles near St. Louis, MO; Kansas City, MO; Council Bluffs, IA; Black Hawk, CO; Vicksburg, MS; East Chicago, IN; and Jackpot, NV.
The consideration represents an EBITDA multiple of 7.6x Ameristar's Adjusted EBITDA of $365 million for the trailing 12-month period ended September 30, 2012, excluding synergies Pinnacle expects to achieve. The combined enterprise would have generated net revenue of $2.4 billion and Combined Adjusted EBITDA of $649 million (excluding $40 million of synergies Pinnacle expects to achieve), over the trailing 12-month period ended September 30, 2012.
Anthony Sanfilippo, President and Chief Executive Officer of Pinnacle Entertainment commented, "The acquisition of Ameristar is a transformative transaction for Pinnacle that will provide us the scale and diversification to more effectively compete. The coupling of Pinnacle and Ameristar properties will create a terrific portfolio of quality assets to serve our combined guests. Over recent years, we have made tremendous progress at Pinnacle in providing a higher level of service to our guests and improving our financial performance. We are thrilled about the opportunities that will be created by combining the two companies. Both companies have developed cultures where team members are focused on providing a high quality experience to their guests and delivering outstanding financial outcomes for their shareholders. Our operating philosophy and cultures are perfectly aligned.
"We believe the transaction represents a uniquely attractive opportunity for Pinnacle and its shareholders given the significantly improved geographic and operational diversification of the combined portfolios," continued Mr. Sanfilippo. "In addition, we believe there is considerable opportunity to expand reach and generate synergies and efficiencies of scale from the increased size of the combined company, as well as an opportunity to drive property margin expansion by applying best practices garnered from both Pinnacle and Ameristar across the combined enterprise. As a result of the combination, we expect to achieve synergies and efficiencies of scale of at least $40 million annually, with potentially greater realization as we move forward through the integration process. Finally, we expect the acquisition of Ameristar to be accretive to our free cash flow and earnings per share following the closing, and for it to provide increased long-term strategic and financial flexibility. We are confident this transaction will drive long-term value for Pinnacle's stakeholders."
Gordon Kanofsky, Chief Executive Officer of Ameristar Casinos commented, "We are excited to have reached this agreement with Pinnacle as this transaction maximizes value for our shareholders and provides them with a significant and immediate premium. We are focused on ensuring a smooth transition and look forward to working with the Pinnacle team. The increased scale and diversification of the Company will expand opportunities for our team members and provide enhancements for our guests."
The transaction is subject to customary closing conditions, approval by Ameristar's shareholders and required regulatory approvals. Pinnacle expects the transaction to close by the end of the third quarter of 2013. Pinnacle has obtained committed financing for the transaction and the transaction is not subject to a financing contingency.