Lakes Entertainment, which owns Rocky Gap Casino Resort near Cumberland, defended its planned $128 million merger with Las Vegas-based Golden Gaming as it announced earnings Thursday.
"The combination of Lakes' strong balance sheet and our Rocky Gap property, with Golden Gaming's casinos and distributed gaming platform and taverns, will make this combined company unique in the marketplace," Lakes CEO Lyle Berman said in a statement.
Lakes and Golden announced in late January that they would merge to form a publicly traded company called Golden Entertainment Inc. with an estimated combined revenue of $348.1 million in 2015.
Golden operates more than 8,500 machines and video lottery terminals in casinos, taverns and other locations in Nevada, while Lake's principal asset is Rocky Gap, the once-troubled, state-owned resort it acquired in 2012. Lakes opened a $35 million casino with 577 slot machines and 17 table games there in 2013.
Lakes announced Thursday that it lost $78,000 on $12.8 million in revenue in the three months that ended Dec. 28. In the same quarter a year earlier, it lost $850,000 on $11.4 million in sales.
For the full year, Lakes lost $24.8 million on $55.2 million in revenue as it wrote off its $21 million investment in a company that owned casinos and horse tracks in Ohio and Kentucky.
Lakes faces a lawsuit that alleges it did not get the best deal for shareholders with the Golden merger, which would give its shareholders stock in the new company worth $9.57 a share. Its shares closed Thursday at $8.66, unchanged for the day.
"We are very excited about this transaction and believe it will benefit Lakes' shareholders tremendously," said Berman, who added that the new company will be well positioned for growth in Nevada and elsewhere.
The merger is subject to approval by the Maryland Lottery and Gaming Control Commission. The state's gaming control agency is conducting an investigation of the company and its principals' financial stability, background and gambling experience. The results of the investigation, expected to take a few months, will be presented to the commissioners.
Lakes and Golden hope to complete the merger this year. Golden CEO Blake Sartini would become the combined company's chairman and CEO. Berman would take a seat on the board and sign a three-year consulting agreement.
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