FOR IMMEDIATE RELEASE
MTR GAMING GROUP AND SCIOTO DOWNS ANNOUNCE MERGER AGREEMENT
Chester, WV, and Columbus, OH, December 24, 2002 – MTR
Gaming Group, Inc. (Nasdaq National Market:MNTG) and Scioto
Downs, Inc. (OTCBB:SCDO) announced today the execution of a
Merger Agreement.
Pursuant to the Merger Agreement, MTR has agreed to pay $32.00
per share, in cash, for the 595,767 outstanding shares of Scioto’s
common stock. Each Scioto shareholder may elect to receive,
instead of the $32.00 per share amount, an amount equal to
$17.00 plus, in certain circumstances set forth in the Merger
Agreement, ten (10) annual contingent earnout payments based
upon 10% of the growth of Scioto’s EBITDA (earnings before
interest, taxes, depreciation and amortization) compared to
the average of Scioto’s EBITDA for the three fiscal years
ending October 31, 2002. In the event any contingent earnout
payment is prohibited by an authorized governmental authority,
a final payment of $15.00 per share would be made instead.
If the contingency set forth in the Merger Agreement is not
satisfied, however, Scioto shareholders who elected the contingent
earnout payment would receive only the $17.00 per share amount.
Scioto Downs owns and operates a harness horse racing facility
in Columbus, OH. Major racing programs conducted at Scioto’s
facilities include the Little Brown Jug Preview, the Scarlet
O’Hara, the Pink Bonnet, the Ohio Sires Stakes events
and Ohio Fair stakes events. For the nine months ended July
31, 2002, Scioto reported revenues of $9.6 million, and a net
loss of $1.2 million.
If the merger is consummated, Scioto will become a wholly
owned subsidiary of MTR. Ed Ryan would continue to serve as
President of Scioto and Laverne Hill would continue to serve
as Vice President. It is anticipated that Scioto’s employees
would not be affected by the merger.
Edson R. (Ted) Arneault, President and CEO of MTR Gaming Group,
commented, “This merger fits well with our strategy to
diversify and leverage our expertise by building or acquiring
other middle-market gaming and/or parimutuel businesses in
states that border West Virginia. Located approximately 175
miles from our Mountaineer Casino Racetrack and Resort,
Scioto presents significant cross marketing opportunities.
We plan to leverage MTR’s and Scioto’s combined
racing experience and capitalize on financial and operating
synergies to produce improved operating results at Scioto.
Plans include modest facility refurbishments, and marketing
initiatives geared toward expanding Scioto’s customer
base.”
Edward T. Ryan, President of Scioto, commented, “We
are enthusiastic about the prospect of joining MTR, and believe
there are many ways that we can work together to further build
Scioto’s business. Our easily accessible location from
I-70 and I-71 would serve as a great asset in a cross marketing
program with Mountaineer. Additionally, we feel the MTR team
would be helpful in expanding our export simulcast program,
similar to their initiatives at Mountaineer. Our combined management
strength and mutual understanding of the market make a great
fit.
”Mr. Arneault added, “While we do not expect Scioto
to contribute materially to MTR’s financial results in
the near term, the addition of Scioto, coupled with our planned
racetrack in Erie, Pennsylvania (approximately 150 miles from
Mountaineer and 250 miles from Scioto) would hedge our market
position in the event of enhanced gaming legislation in either
state.”
Consummation of the transaction is subject to various customary
conditions, including, among other things, MTR’s successful
completion of its due diligence review, approval by MTR’s
lenders, approval by Scioto’s shareholders and the obtaining
of all necessary regulatory approvals, including but not limited
to the Ohio Racing Commission.
MTR expects to finance the transaction with a combination
of cash on hand, cash flow from operations and borrowings under
MTR’s lines of credit. Additionally, MTR anticipates
that prior to Scioto’s mailing of its proxy statement
to its shareholders, MTR will have obtained a bank commitment
for any additional funding required to complete the merger,
although no assurances can be given.
The transaction is expected to be consummated in the second
quarter of 2003, and the Merger Agreement is subject to termination
by either party if the merger is not consummated on or before
December 31, 2003. MTR and Scioto will each include the Merger
Agreement as an exhibit to a Report on Form 8-K, which each
respectively expects to file no later than December 27, 2002.
The merger transaction has been approved by the Boards of Directors
of both MTR and Scioto.
Subject to clearance from the U.S. Securities and Exchange
Commission, Scioto plans to file and mail to its shareholders
a proxy statement containing information about Scioto, the
proposed merger, and related matters. Scioto’s shareholders
are urged to read the proxy statement carefully when it is
available, as it will contain important information that stockholders
should understand before making a decision about the merger.
The proxy statement (when it is filed), as well as other filings
containing information about Scioto and the merger transaction
can be obtained without charge at the SEC’s website (www.sec.gov).
Copies of the proxy statement, when available, and MTR’s
and Scioto’s SEC filings will also be obtainable, without
charge, from Edson R. Arneault, President, CEO & Director,
MTR Gaming Group, Inc., State Route 2 South, P.O. Box 356,
Chester, WV 26034, Telephone: 304-387-8300 (with respect to
MTR’s filings) and from Edward T. Ryan, President & General
Manager, Director, Scioto Downs, 6000 South High Street, P.O.
Box 07823, Columbus, OH 43207, Telephone: 614-491-2515 (with
respect to Scioto’s filings).
To the extent required by applicable law and regulations,
MTR will file with the SEC a registration statement containing
the prospectus to be used by MTR to register the contingent
earnout payment interests to be offered to Scioto shareholders
subject to and following their approval of the merger transaction.
Shareholders of Scioto are urged to read the registration statement
and the prospectus (if applicable) and the proxy statement
regarding the proposed transaction when they become available
and any other relevant documents filed with the SEC, as well
as any amendments or supplements to those documents, because
they will contain important information. Shareholders will
be able to obtain a free copy of the proxy statement and prospectus
included in the registration statement, as well as other filings
containing information about Scioto and MTR, at the SEC’s
website (www.sec.gov).
Copies of the proxy statement, prospectus and the SEC filings
that will be incorporated by reference in the proxy statement
and prospectus can also be obtained, without charge, by directing
a request to either Edson Arneault or Edward Ryan at their
addresses listed in this news release.
Scioto and its directors and executive officers may be deemed
to be participants in the solicitation of proxies from the
shareholders of Scioto in connection with the merger. Information
regarding those participants is included in the proxy statements
for Scioto’s most recent annual shareholder meetings,
which are available at the SEC’s website. Additional
information regarding the interests of those participants may
be obtained by reading the proxy statement regarding the proposed
transaction when it becomes available. About MTR Gaming Group
MTR Gaming Group owns and operates the Mountaineer Casino Racetrack and Resort in Chester, West Virginia, which currently encompasses
a thoroughbred racetrack with off-track betting and export
simulcasting, 3,200 slot machines, 359 hotel rooms, golf course,
spa & fitness center, theater and events center, convention
center and fine dining and entertainment. The Company also
owns and operates the Ramada Inn and Speedway Casino in North
Las Vegas, and holds a license to build a new thoroughbred
racetrack with parimutuel wagering in Erie, Pennsylvania. MTR
is included on the Russell 2000® and Russell® 3000
Indexes. For more information, please visit www.mtrgaming.com.
About Scioto Downs
Scioto Downs owns and operates a harness horse racing facility in Columbus,
OH. Major racing programs conducted at Scioto’s facilities include
the Little Brown Jug Preview, the Scarlet O’Hara, the Pink Bonnet,
the Ohio Sires Stakes events and Ohio Fair stakes events.
Except for historical information, this
press release contains forward-looking statements concerning,
among other things, the acquisition of Scioto Downs, Inc.
Such statements are based on MTR’s current plans and
expectations. Such statements are subject to a number of
risks and uncertainties that could cause the statements made
to be incorrect and/or for actual results to differ materially.
Those risks and uncertainties are described in the Company’s
periodic reports filed with the Securities and Exchange Commission,
and with respect to the Scioto Downs acquisition are described
in the Merger Agreement, as amended, which is attached as
exhibits to the Company’s reports on Forms 8-K filed
December 24, 2002, March 5, 2003, and May 7, 2003. MTR’s
plans to build a racetrack in Erie, Pennsylvania remain subject
to the possibility of a legal challenge to the July 17, 2003
decision of the Pennsylvania State Horse Racing Commission
reinstating the license (which was originally granted in
late 2002) and the risks associated with land acquisition,development,
construction and integration of new operations. The Company
does not intend to update publicly any forward-looking statements,
except as may be required by law. |
