Casino Operator Relishes Asset Sale After Dreams Merger Falls Through
Enjoy, a casino operator, has now acknowledged their interest in selling a portion of their casino business. In a statement to Chile's Financial Market Commission (CMF), they disclosed that they are collaborating with potential partners to either sell their assets entirely or through share acquisitions. This announcement follows reports that Enjoy couldn't finalize their merger with Dreams due to allegations of market manipulation.
Recent gossip hinted at the potential sale of Enjoy's casino in Punta del Este, Uruguay, acquired in 2013. However, the recent statement shows their intention to consider broader options, either selling the entire portfolio or specific properties.
Enjoy's primary shareholders (Euroamerica with 15.25% and Penta with 11.26%) appointed Asset Chile as their financial advisor to handle the search for acquirers. Sources reveal that Asset has contacted various local and foreign investment funds, but mostly global casino operators.
After the aborted merger with Dreams, experts speculated that Enjoy might try to recover a small portion of the $328 million invested in the Punta del Este property in 2013. The initial buyout was for 45% of the property ($139 million), followed by acquiring 51% in 2017 for an additional $189 million.
Other expenses and casino operation debts significantly raise the potential sale price. The possible sale's impact on Punta del Este's tourist economy, as Enjoy's owned hotel and casino (previously Conrad) is a major tourism driving force, is unclear.
Enjoy's CEO, Eliseo Gracia Martinez, mentioned in the CMF statement that the company is mulling "all possible alternatives for a strategic transaction." Asset Chile will gauge the potential interest of prospective investors, who might be interested in owning a stake in the company or specific assets in exchange for their investment.
A Rocky Path Forward
Bearing the potential value of the deal in mind, seeking a direct buyer may not be straightforward. International casino operators face numerous challenges when seeking to enter new markets, ranging from compliance issues to financial requirements. Neither the Chilean nor the Uruguayan industries are lucrative enough for U.S. operators commonly expecting returns of 10-12%.
In March 2023, Enjoy's ROE, per its financial records, was around -5.62%, a stark contrast to the 2.74% from the previous year. For the first quarter of 2023, the company posted EBITDA of CLP10.5 billion (US$12.3 million), significantly lower than CLP18.48 billion (US$21.65 million) in Q1 2022.
The weakened figures can be attributed to reduced revenues in Enjoy's Punta del Este division and additional costs resulting from currency fluctuations and inflation-related losses of approximately CLP3.112 billion (US$3.64 million).
Punta del Este's gaming industry has been on the uptick this year. Chile's tourism sector is showing signs of recovery, potentially helping Enjoy attract prospective investors.
Contained Text:
Following initial denials, Enjoy admitted its intention to sell part of its casino operations, according to a statement sent to Chile's Financial Market Commission (CMF). The move comes after the failed merger with Dreams and accusations of market manipulation. They are now exploring potential strategic transactions with various parties.
Original reports focused on the possible sale of the casino in Punta del Este, Uruguay, but the new mandate includes all of Enjoy's assets or specific properties. Asset Chile, financial advisors to Enjoy's shareholders, have reached out to investment funds and international operators.
The Punta del Este property was purchased for $328 million in 2013, but the additional investments and debts bring the total to an estimated $500 million. Enjoy's portfolio includes rights to operate in nine Chilean jurisdictions. However, international gaming giants face problems entering new markets such as Chile and Uruguay.
Enjoy's financial situation is not ideal, with an ROE of -5.62% in 2023, down from 2.74% in 2022. The company's EBITDA dropped to CLP10.5 billion (US$12.3 million) in Q1 2023, in contrast with the CLP18.48 billion (US$21.65 million) from Q1 2022. Waning revenues and cost concerns marred their Q1 performance.
Still, Chile's gaming industry is on the rebound, positioning Enjoy as a potential target for interested investors.
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Source: www.casino.org
