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Isle of Capri acquires Mississippi casino

6 April 2010

VICKSBURG, Mississippi -- Isle of Capri Casinos has acquired the Rainbow Casino in Vicksburg, Miss., from Bally Technologies for $80 million in an all-cash transaction, the companies announced Monday.

The transaction is expected to close by June 30 pending regulatory approval.

Las Vegas-based Bally, a slot machine manufacturer, has owned the Rainbow for 16 years. The company had reportedly been trying to sell the small casino for several years. The Rainbow has 350 employees, 25,000 square feet of gaming space and an accompanying 89-room hotel.

"We felt it was important that we focus on our core business of providing industry-leading games and systems technology," Bally Chief Executive Officer Richard Haddrill said in a statement.

Isle of Capri Chief Executive Officer James Perry said the acquisition will allow his St. Louis-based company to expand its operations in Mississippi, where the company has casinos in Biloxi, Lula and Natchez.

"Rainbow is a successful property with a solid core business that will fit very well into the Isle portfolio," Perry said.

Separately, Bally's announced a contract with Isle of Capri to replace a competitor's casino management system with a Bally system and server-based gaming product.

The agreement covers 10 of Isle of Capri's casinos. Isle of Capri's remaining properties already use Bally systems. Isle of Capri is expected to roll out this technology over the next several years.

The transactions with Isle of Capri, coupled with slower-than-expected gaming equipment sales so far in 2010, caused Bally to revise the financial projections the company had given Wall Street earlier this year.

In a statement, Bally said it now expects earnings per share of $2.15 to $2.25 for the fiscal year ending June 30, down from its previous forecast of $2.30 to $2.55 per share.

"While we are disappointed with the pace of customer capital deployment so far in calendar year 2010, we remain confident in our longer-term prospects," Haddrill said.

He said the company had begun delivering on orders for a new wheel-based slot machine that was previewed at the Global Gaming Expo a year ago.

Another challenge has been in Alabama, where the state halted gaming. Bally had spent about $5 million in development financing in the market and had 1,750 machines in four locations, worth about $7 million. Bally said the company is owned about $1 million in uncollected funds.

"Depending on the evolving circumstances in Alabama, all or a portion of these assets may be considered impaired," the company said in a statement.