Century Casinos, Inc. announced today that its subsidiary Century Casinos Europe GmbH signed credit and management agreements with United Horsemen of Alberta Inc. in connection with the development of a proposed race track and entertainment center in Balzac, north metropolitan area of Calgary, Alberta.
The proposed project would be the only horse race track in the Calgary area and would consist of a 11/16th mile racetrack and a Racing Entertainment Centre, including a gaming floor proposing 625 gaming machines, a bar, a lounge, restaurant facilities, an off-track-betting area and an entertainment area. This Racing Entertainment Centre license is the only license still available in any metropolitan area of Alberta. This particular license application pre-dates the AGLC recently approved three-year moratorium on new Casinos and Racing Entertainment Centers, with an option to extend the moratorium for an additional two years.
CCE has agreed to loan to UHA up to CAD $13 million for the exclusive use of developing the proposed project. The loan has an interest rate of LIBOR plus 800 bps, a term of five years and is convertible by CCE into a 60 percent ownership position in UHA. The Company intends to provide the loan to UHA with borrowings under the Company's Bank of Montreal Credit Agreement.
Once the project is developed and operational and for as long as CCE has not converted the loan into a majority ownership position in UHA, CCE will receive 60 percent of UHA's net profit before tax as a management fee.
Both the credit and management agreements are subject to development approvals and licensing from the AGLC. UHA and CCE have submitted the relevant applications already, but there is no assurance that the needed approvals will be obtained or as to the timing of such approvals. Horse Racing Alberta, the governing authority for horse racing in Alberta, has already approved the project and issued a license.
The proposed project would be located less than one mile north of the city limits of Calgary and 4.5 miles from the Calgary International Airport. The location is ideally positioned exiting off the Queen Elizabeth II Highway, which is the main corridor between Calgary and Edmonton and one of the most heavily used highways in Western Canada, next to the CrossIron Mills shopping mall, a major regional attraction, and would capture both the north and the northwest Calgary markets, which do not currently have a casino. The Company anticipates that the race track and entertainment center would be completed 12 to 18 months following completion of the approval process.