TORONTO, May 4, 2021 /CNW/ – Great Canadian Gaming Corporation (TSX: GC) (“Great Canadian,” or “the Company”) today released its financial results for the quarter ended March 31, 2021. (the “first quarter”).
FIRST QUARTER 2021 UPDATES
-On April 5, 2021, the Company announced that Raptor Acquisition Corp (the “Purchaser”), an affiliate of Apollo Global Management, Inc. (NYSE:APO) (“Apollo Funds”), had received approval under the Investment Canada Act for the acquisition of Great Canadian, pursuant to a previously announced plan of arrangement (the “Arrangement”) involving Great Canadian, the Purchaser. The agreement is also subject to a few more closing conditions. It should be finished in the second quarter of 2021.
-Since the temporary suspension of all of the Company’s gaming facilities and ancillary amenities on March 16, 2020, the COVID-19 coronavirus pandemic (the “Pandemic”) has had a major effect on the Company’s business. For a portion of the first quarter of 2021, the Company operated some gaming properties in Ontario and Atlantic under restricted operating conditions, but was forced to temporarily close the majority of these properties at different dates due to localized health authority mandates. Except for the Atlantic properties, Elements Casino Grand River and Shorelines Casino Belleville, all properties were closed as of March 31, 2021. Following quarter-end, all non-critical construction activities on the Company’s Ontario developments were halted, and the remaining Ontario and Casino Nova Scotia assets were mandated to close.
Terrance Doyle, the Company’s Interim Chief Executive Officer Said that “Significant progress has been made in the closing of the Arrangement with Apollo Funds, as demonstrated by the recent Investment Canada Act approval. We believe this transaction is beneficial for our shareholders, our team members, our guests, and other stakeholders, and we are working diligently to satisfy all remaining closing conditions, including required regulatory approvals. Great Canadian remains committed to help contain the spread of COVID-19 by adhering to all directives and guidance issued by public health authorities in each jurisdiction that we operate, including suspending our operations when mandated to do so. Our ability to respond to local health mandates promptly and efficiently is a testament to the preparation and readiness of our team members. The Company remains focused on reopening our gaming properties and ancillary amenities as appropriate, and our teams have demonstrated through our results thus far that we can operate while continuing to prioritize the health and safety of team members and guests.”
Mr. Doyle added that “We have reason to remain optimistic, despite the challenges we have faced since the start of the Pandemic. For our properties that were allowed to reopen, we have observed encouraging visitation levels despite operating under restricted conditions. Additionally, we are encouraged by the continued progress of the mass vaccination program across Canada, as well as the initial results of the wider reopening of other markets where vaccination levels are higher.”
FINANCIAL REVIEW
As compared to the same time last year, the Company’s gaming facilities faced a temporary suspension of operations and limited operating conditions, resulting in lower revenues, expenses, Adjusted EBITDA1, shareholders’ net (loss) profits, Free Cash Flow1, and overall cash flows. Although some of the Company’s Ontario and Atlantic properties were allowed to open under restricted operating conditions for a portion of the first quarter of 2021, gaming revenues at these properties were substantially lower than in the prior year’s comparable period.
In the first quarter of 2021, the company had negative Free Cash Flow of $70.5 million, compared to $50.8 million in the same timeframe of 2020. As previously reported, the rise in negative Free Cash Flow was primarily due to lower Adjusted EBITDA, which was partially offset by lower income taxes, interest, and capital expenditures. The Company funded the negative Free Cash Flow in the first quarter of 2021 with $32.6 million in net borrowings from its credit facilities and $37.9 million in available cash balances.
The $2.7 million cash inflow in the first quarter of 2021 was primarily due to the $44.8 million proceeds from the exercise of incentive share options. Cash inflow in the first quarter of 2021 was lower than cash inflow of $552.2 million in the same period of 2020, leading to lower cash generated from operating activities as a result of the temporary suspension of operations, as well as lower cash generated by financing activities, partially offset by lower cash used in investing activities due to the Company’s development’s construction timing.
Cash inflow in the first quarter of 2020 included the issuance of the Senior Unsecured Debentures and a $325.0 million draw on the revolving portion of the Senior Secured Credit Facilities.
OUTLOOK
Mr. Doyle said that “We have completed the construction of the casino portion at Pickering Casino Resort, which will be ready to open when it is safe and appropriate to do so. We believe this casino will be a spectacular addition to the gaming and entertainment marketplace in the Greater Toronto Area. We continue to work on the remaining non-gaming amenities at Pickering Casino Resort and other projects in Ontario, including Casino Woodbine and Great Blue Heron, which will be funded by One Toronto Gaming’s capital expenditures credit facility. The timing of completing these developments will depend on the extent of Pandemic-related restrictions on non-essential construction activities, which have been suspended again on April 16, 2021. Despite the impact that the Pandemic has had on the timing of these developments, we do not anticipate any impact to our total planned capital spend. The Company’s financial and operational covenants under its credit facilities continue to be temporarily waived pursuant to amended credit facility agreements which were entered into in the fourth quarter of 2020. As at March 31, 2021, Great Canadian continues to remain in stable capital and liquidity position with a cash balance of $437.5 million and $939.7 million of available undrawn credit on its credit facilities, subject to applicable covenants.”
CONFERENCE CALL
The Company will not hold a conference call for investors and analysts to review its financial performance due to restricted activities and the pending Arrangement with Apollo Funds. Please see the Condensed Interim Consolidated Financial Statements and Management’s Discussion and Analysis at www.gcgaming.com or www.sedar.com for more comprehensive financial reports and analysis (available on May 4, 2021).
ABOUT GREAT CANADIAN GAMING CORPORATION
Great Canadian Gaming Corporation, headquartered in Ontario, operates 26 gaming, entertainment, and hospitality facilities throughout the provinces of Ontario, British Columbia, New Brunswick, and Nova Scotia. Fundamental to the Company’s culture is its commitment to social responsibility. Great Canadian’s brand unifies the Company’s community, volunteering, and social responsibility activities under the message “PROUD of our people, our business, our community.”
Under the PROUD program, Great Canadian annually supports over 1,400 charitable and non-profit organizations across Canada.
In each Canadian gaming jurisdiction, a significant portion of gross gaming revenue from gaming facilities is retained by our Crown partners on behalf of their provincial government for the purpose of supporting programs like healthcare, education and social services.
