Red Deer-based Gamehost Income Fund (TSX:GH.UN) has raised its stake in the Deerfoot Inn and Casino.
The fund announced on Tuesday that it has struck a deal to boost its 40 per cent interest in the Calgary property by 51 per cent. It is acquiring this additional share from David and Darcy Will, the president and vice-president respectively of Gamehost’s manager, and both trustees of Gamehost.
Gamehost said in a news release that it is paying $57.6 million to the Wills, subject to adjustments. Completion of the deal is subject to unitholder approval at an April 30 meeting and other conditions.
The release said that an independent committee of Gamehost’s board of trustees had concluded that the purchase was in the best interest of the fund and its unitholders. It added that the committee noted the Deerfoot Inn and Casino has been operating for four years, and that a bigger stake in its operations should help Gamehost take advantage of the improving Alberta economy.
Meanwhile, Gamehost has also entered into an agreement for a syndicate of underwriters to purchase $55 million in convertible unsecured debentures. These will earn 6.25 per cent interest per year, and at the holders’ option may be converted into trust units.
After Aug. 1, 2013, and before July 31, 2014, Gamehost may redeem the debentures under certain conditions.
In addition to its interest in the Deerfoot Inn and Casino, Gamehost owns and operates the Boomtown Casino in Fort McMurray, and the Great Northern Casino, Service Plus Inns & Suites and a strip mall in Grande Prairie.
Trade in Gamehost units on the Toronto Stock Exchange was halted Tuesday pending the announcement of the Deerfoot Inn and Casino deal. Unit prices were unchanged at $8.20.