The deal for the GTA Bundle, which included OLG Slots at Woodbine and Ajax Downs and the Great Blue Heron Casino, closed earlier this year. A three-member consortium — Great Canadian Gaming (TSX:GC), Brookfield Business Partners, and Clairvest — acquired the rights for the next 22 years. Great Canadian Gaming and Brookfield both walked away with a 49% stake.
In the spring of this year, investors and Ontario citizens found out just how great of a deal it was. According to Great Canadian Gaming, the Bundle’s purchase price was $158 million, which landed the trio $161.3 million in total assets. The GTA Gaming Bundle held $62 million in cash at the time of the acquisition, which puts the effective purchase price around $100 million — an absolute steal.
In just over two months of operating the assets, the consortium had already made up the purchase price. The GTA Bundle contributed $86.7 million in revenue in and $31.3 million in net income over this short period. The length and value of the deal is a stunning win for Great Canadian Gaming that will power revenues over the next two decades.
Back in September, I’d discussed why Great Canadian Gaming still represents a fantastic opportunity for growth investors. The stock’s boom after the release of its Q3 2018 has eliminated all of its slight losses throughout the turbulent month of October.
Shares of Great Canadian have climbed 53% in 2018 as of early afternoon trading on November 8. The stock was up over 60% year over year. Even after its recent spike Great Canadian has all the makings of a top-notch long-term hold for those seeking growth.
Great Canadian released its third-quarter results on November 5. The company reported revenues of $343.2 million, which was up 115% from the prior year, largely on the back of contributions from the GTA Bundle. Adjusted EBITDA increased 124% year over year to $140.6 million. Great Canadian posted net earnings of $52.6 million, or $0.86 per share, which was up 95% and 96%, respectively, from Q3 2017.
Great Canadian held a grand opening ceremony on October 15 for the Shorelines Casino Peterborough. This new addition to the East Gaming Bundle features 500 slot machines, 22 table games, restaurants and a live entertainment area. The company has planned expansions and renovations in its other Bundle properties, which are expected to boost revenues significantly going forward.
The company projects that Casino Woodbine will complete its transformation into a casino resort destination by 2021. Construction is underway for another resort in the eastern GTA and is targeted for opening by the end of 2019. The company also has plans to open a hotel and theatre in the area.
At the end of Q3 2018, Great Canadian boasted a cash balance of $579.8 million and total available credit facility capacity that exceeds $1 billion. Investors may have missed out on their buy-low chance in October, but Great Canadian is still an enticing buy as the year winds down. Its aggressive GTA expansion will fuel revenue growth over the 22-year period of the deal.
