VEGAS, Nevada Pinnacle Entertainment, Inc.
(NYSE: PNK) and Atlantic Coast Entertainment Holdings,
Inc. ("ACE Hi") today said they have signed
a definitive agreement under which Pinnacle agreed to
purchase the entities that own The Sands and Traymore
sites in Atlantic City, N.J. from entities affiliated
with financier Carl Icahn 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.
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
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 Daniel R. Lee, Pinnacle'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.
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,"
Mr. Lee 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."
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.
Icahn 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. Icahn 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 Pinnacle, Pinnacle 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. Icahn.
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
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. Icahn,
including AREH and AREP Sands, have agreed to pay to Pinnacle
all of any additional value received by such entities
through an overbid.
expects to close its purchase of The Sands/Traymore site
by the end of the year.