The Eastern Band of Cherokee Indians and Caesars Entertainment have signed a letter of intent in which the Tribe states it is looking into buying the Caesars Southern Indiana hotel-casino. On November 12, the Tribe Council approved due diligence funding.
Caesars To Work Exclusively With The Tribe Over The Next 45 Days
The Eastern Band of Cherokee Indians (EBCI) has expressed interest in buying the Caesars Southern Indiana casino, as the Tribal Council approved due diligence funding on Thursday.
Principal Chief Richard G. Sneed had submitted a resolution approved by the Council on November 12. It states that EBCI and casino operator Caesars Entertainment has signed a letter of intent “expressing the Tribe’s desire to potentially purchase the Southern Indiana casino being sold by Caesars”, on the condition both parties agree on the terms of the purchase.
From November 12, Caesars will work solely with the Tribe over the next 45 days, in regards to the potential buyout. During this period, Caesars agreed to not consider offers from other parties.
Hotel casino Caesars Southern Indiana, first called Caesars Indiana when it opened in 1998 in Elizabeth, Indiana, features 503 guest rooms and 110,000 square feet of gaming amenities such as a sportsbook, table games, and 1,650 slot machines.
About $10.6 Million To Cover Due Diligence and Additional Costs
The Council approved funding for due diligence steps prior to the possible transaction, estimated at approximately $500,000. The EBCI will hire experts to research and examine the casino’s finances and legal points, as well as its IT systems, “engineering, structural, and environmental aspects”.
An additional $10.11 million will be allocated to the purchase to cover “unavoidable costs such as regulatory licensing fees, debt financing fees, insurance, and other costs”. Southern Indiana’s legal counsel will be paid $150,000. The law firm under contract with the tribe – of Brownstein, Hyatt, Farber, and Schreck will receive $1.5 million for “monthly invoices for work actually performed […] through the date of closing of the purchase”.
Chief Sneed said during the Thursday meeting that the Tribe was purchasing “cash flow – a business with a known amount of cash flow and a known return to the Tribe.”
All aspects of the facility will be investigated, with a special interest in the casino’s records and accounts. The vetting process will be extremely thorough before closing the deal, Chief Sneed added.
First Potential Acquisition of An Existing Casino
This is the first time the Tribe looks into the acquisition of an existing casino, as it is “used to greenfield projects” where the EBCI builds everything from the ground up.
However, after a “monopolistic run for 23 years” with its gaming business, the EBCI needs to diversify its sources of income, Chief Sneed said.
“We’re painfully aware that that’s going to come to an end, and the decisions that we make now or don’t make now will determine where the new normal is on the downside. We’ve had 23 years of all up-side…We’re looking for long-term stability and sustainability and being able to fund these programs in perpetuity.”Principal Chief Richard G. Sneed
“This is a major investment, and I think that part of what this is going to do is basically let us know if it is a good investment for the Tribe or not. And, I think this is a good vetting system to have in place and something that I’ve been advocating for a while… It’s a good way to vet a future investment for the Tribe.”Chelsea Saunooke, Wolftown Representative
Eight Council Representatives voted in favor of the resolution, with three against and one abstention.