In contrast to earlier reports in thefinancial press, it turns out that Casinos Austria’s joining the partnership in Greece’s Casino Loutraki will not yield a capital gain for its Israeli owners, Club Hotel, Miloumor and Queenco.
The details of the deal sent to the Tel Aviv Stock Exchange today show that a company in the Casinos Austria group, which operates scores of casinos worldwide, will become a partner in a new company, the remainder of whichwill be held by the Israeli investors. The Israelis will transfer the controlling interest - 78% - in Casino Loutraki to the new company. Casinos Austria will hold 25% of the voting rights in the joint company. The price of the deal was set at a p/e ratio of 14 for Casino Loutraki, i.e. €500 million. That means that until the casinos generates that amount in profits, Casinos Austria will not participate in any dividends distributed by the joint company.
Under the deal, Casinos Austria has pledged to provide financing for the joint company, including a €74 million bank loan to the joint company, using Casino Loutraki as collateral. A source close to the deal claimed today that Casinos Austria joining the Casino Loutraki partnership was intended to lend Casino Loutraki the reputation, connections, and financial wherewithal of Casinos Austria.
Under the terms of the deal, the parties will have mutual put and call options proportional to their stakes in the partnership, which will come into effect four years from the date the deal is completed. Casinos Austria will be given collateral against the exercise of theoptions.
At the same time, the parties agreed that Casino Loutraki’s owners would receive an option to acquire up to a third of the ownershipof Casino Jericho from Casinos Austria. The outbreak of the intifada in September 2000 closed the Casino Jericho. The option values Casino Jericho at$400 million, and will be exercised when the casino is reopened. A $3 million downpayment was made on the option, and an additional $25 million guarantee will be provided when it is exercised.
Opened in 1995, Casino Loutraki has become of the brightest overseas investments by Israelis. Resido Fibi, owned by Miloumor (Freddy Robinson) and Queenco (Yigal Zilka)indirectly owns 37% of Casino Loutraki. Club Hotel (owned by Moshe Boblil and Nissan Khakshouri) has a similar stake, and Yair Karni CPA owns 4%.
Greek investors, mainly Piraeus Bank and Argobank, own the remaining shares in Casino Loutraki, purchased three years ago at a company value of $810 million. That deal yielded a huge profit to the casino’s owners. A plan to float Casino Loutraki on the Athens Stock Exchange has since been shelved, and it is now clear that the company’s owners will have to wait for the next exit.
So far as is known, Casino Loutraki postsannual pre-tax revenue of over €160 million and a net profit of €30 million. In January 2002, Casino Loutraki’s owners and Greek entities jointly participated in an international tender to privatize the nearby Casino Parnitha in Athens, losing to Hyatt Regency, whose bid was approved by the Greek authorities.
Published by Globes [online] - www.globes.co.il - on December 24, 2002