FOR FURTHER INFORMATION: Atlantic Coast Entertainment Holdings, Inc.: George Toth (President, The Sands)
Exhibit
99.1
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SANDS
CASINO HOTEL
Indiana
Avenue & Brighton Park
Atlantic
City, New Jersey 08401
|
FOR
FURTHER INFORMATION:
Atlantic
Coast Entertainment Holdings, Inc.:
Xxxxxx
Xxxx (President, The Sands)
(000)
000-0000
Pinnacle
Entertainment:
Xxxxx
Xxxxxx (Investors)
Xxxxxxx
Xxxxxxxxxx (Media)
(000)
000-0000
PINNACLE
ENTERTAINMENT AGREES TO PURCHASE
SANDS/TRAYMORE
SITE IN ATLANTIC CITY, N.J.
Plans
Major New Resort Along The Boardwalk
LAS
VEGAS, September 5, 2006 - Pinnacle Entertainment, Inc. (NYSE: PNK) and Atlantic
Coast Entertainment Holdings, Inc. ("ACE Hi") today said they have signed a
definitive agreement under which Xxxxxxxx agreed to purchase the entities that
own The Sands and Traymore sites in Atlantic City, N.J. from entities affiliated
with financier Xxxx Xxxxx for approximately $250 million, plus an additional
$20
million for certain tax-related benefits and additional real estate. Together,
the land being acquired comprises approximately 18 contiguous acres at the
heart
of Atlantic City, with extensive frontage along the Boardwalk, Pacific Avenue
and Brighton Park. Pinnacle plans to design and build an entirely new casino
hotel on the site, which would be among the largest and most spectacular resorts
in the region.
As
part
of the agreement, Pinnacle required that the sellers proceed to close the
existing hotel-casino, which is anticipated to occur within approximately 70
days of the signing of the agreement. The closure will facilitate the
construction of a new, much larger facility as quickly as possible. The
26-year-old Sands, which was one of the first gaming resorts to open in Atlantic
City, is one of the city’s smallest properties.
“Atlantic
City is one of the top U.S. gaming destinations, and we’re looking forward to
being a part of the world-famous Boardwalk,” said Xxxxxx X. Xxx, Xxxxxxxx’s
Chairman and Chief Executive Officer. “This major new resort will be a key
component in our plan to build a national network of gaming properties. It
will
also help extend our development pipeline and our Company’s
growth through 2010 and beyond. In connection with our longstanding interest
in
Atlantic City, we submitted our initial license application in New Jersey
several months ago. The regulatory investigation is ongoing.
“The
success of recent Atlantic City developments has proven that customers in the
Northeast respond positively to state-of-the-art gaming resort design and
amenities,” Xx. Xxx continued. “While we regret the necessity of closing the
Sands to create an exciting new resort, we look forward to working with gaming
regulators, state and local authorities on this project to create more jobs,
tax
revenues and other lasting benefits for the region.”
Under
Federal law, employees soon will receive 60 days’ notice of the expected
closing. Among its provisions for employees, the agreement provides for
severance benefits in accordance with union agreements, as well as severance
pay
for nonunion employees who stay through the 60-day closing period.
Mr.
Xxxxx
stated, “After spending many months reviewing various projects for this
property, it became patently clear that a shutdown of The Sands was necessary
and inevitable to make room for a great new casino. We also concluded that
this
was the most propitious time to undertake this shutdown given the robust
employment environment in Atlantic City. This new casino will be a great plus
for Atlantic City and the state of New Jersey.” Mr. Xxxxx has seen to it that
ACE Hi, the parent company of The Sands, although not legally required, will
fund an additional one week of severance for eligible employees for each year
of
service over two years. In addition, through his negotiations with Xxxxxxxx,
Xxxxxxxx has agreed that full-time employees who have been with The Sands for
at
least six months will be eligible for two weeks’ severance funded by Pinnacle.
Pinnacle also has agreed to provide outplacement services to all Sands
employees, and those willing to relocate will be considered for positions at
other properties operated by Pinnacle or Mr. Xxxxx.
The
transaction is subject to the satisfaction of customary closing conditions.
The
transaction is not subject to financing. The majority stockholder of ACE Hi,
AREP Sands Holding, LLC, which owns approximately 58% of the outstanding stock
of ACE Hi, has delivered a stockholder written consent approving the sale of
The
Sands. AREP Sands is a wholly-owned subsidiary of American Real Estate Holdings
Limited Partnership ("AREH").
The
acquisition agreement contains non-solicitation, fiduciary out and termination
fee provisions. ACE Hi is not permitted to solicit other acquisition proposals,
but for 45 days may negotiate with anyone that submits unsolicited proposals
if
the ACE Hi board believes that such a proposal is, or is reasonably likely
to
result in, a proposal that is more favorable to the ACE Hi stockholders. If
within such 45-day period, the ACE Hi board determines that an alternative
proposal is more favorable to the ACE Hi stockholders, ACE Hi is permitted
to
terminate the acquisition agreement with Pinnacle upon payment of a $10 million
termination fee. In addition, entities affiliated with Mr. Xxxxx, including
AREH
and AREP Sands, have agreed to pay to Pinnacle all of any additional value
received by such entities through an overbid.
Pinnacle
expects to close its purchase of The Sands/Traymore site by the end of the
year.
About
Atlantic Coast Entertainment Holdings, Inc.
Atlantic
Coast Entertainment Holdings, Inc. (“Atlantic Holdings”) is a Delaware
corporation formed in October 2003. ACE Gaming, LLC, a New Jersey limited
liability company and wholly-owned subsidiary of Atlantic Holdings, is the
owner
and operator of The Sands Hotel and Casino in Atlantic City, New
Jersey.
About
Pinnacle Entertainment
Pinnacle
Entertainment owns and operates casinos in Nevada, Louisiana, Indiana,
Argentina, and the Bahamas, owns a hotel in Missouri, and owns a casino site
and
has significant insurance claims related to a hurricane-damaged casino and
hotel
complex previously operated in Biloxi, Mississippi. Pinnacle also has two casino
development projects in the St. Louis, Missouri area, which are dependent upon
final approval by the Missouri Gaming Commission.
Atlantic
Holdings Forward-Looking Statement
This
release contains certain “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995, many of which are beyond
the
ability of AREH or ACE Hi to control or predict. Forward-looking statements
may
be identified by words such as “expects,” “anticipates,” “intends,” “plans,”
“believes,” “seeks,” “estimates,” “will” or words of similar meaning and
include, but are not limited to, statements about the expected future business
and financial performance of AREH or ACE Hi and their subsidiaries. AREH and
ACE
Hi undertake no obligation to publicly update or review any forward-looking
information, whether as a result of new information, future developments or
otherwise.
Pinnacle
Forward-Looking Statement
All
statements included in this press release, other than historical information
or
statements of historical fact, are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements, including statements regarding Xxxxxxxx's pending
acquisition of The Sands, the development opportunities associated with the
acquisition of The Sands, other current and potential future development
opportunities and anticipated opening dates, are based on Pinnacle management's
current expectations and are subject to risks, uncertainties and changes in
circumstances that could significantly affect future results. Accordingly,
Pinnacle cautions that the forward-looking statements contained herein are
qualified by important factors that could cause actual results to differ
materially from those reflected by such statements. Such factors include, but
are not limited to: (a) the risk that the acquisition does not close, (b) the
risk that new projects and expansions could strain Pinnacle's financial
resources and might not provide for a sufficient return, if any (c) significant
competition facing Pinnacle in all of its markets, (d) many construction-related
factors could prevent Pinnacle from completing its construction and development
projects within budget and on time; and (e) other risks, including those as
may
be detailed from time to time in Pinnacle's filings with the Securities and
Exchange Commission ("SEC"). For more information on the potential factors
that
could affect Pinnacle's financial results and business, review Pinnacle's
filings with the SEC, including its Annual Report on Form 10-K, its Quarterly
Reports on Form 10-Q and its Current Reports on Form 8-K.
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