CHESTER, W.VA. MTR follows plan, merges with Scioto

It aims to acquire similar gaming businesses that border West Virginia.
CHESTER, W.Va. (AP) -- West Virginia-based MTR Gaming Group Inc. announced Tuesday it has agreed to pay about $19 million to merge with an Ohio harness racing track.
The purchase of Scioto Downs near Columbus, Ohio, fits with MTR's strategy to acquire "middle-market gaming and/or pari-mutuel businesses in states that border West Virginia," said Ted Arneault, MTR's president and chief executive officer.
It also positions MTR to take advantage of potential gaming law changes in Ohio and Pennsylvania. MTR owns Mountaineer Race Track & amp; Gaming Resort in Chester, which operates 3,000 slot machines.
Pennsylvania Gov.-elect Ed Rendell favors legalizing slot machines in his state. Ohio Gov. Bob Taft has so far opposed slots.
MTR recently received permission from Pennsylvania authorities to build a horse track near Erie. That decision is being challenged.
"While we do not expect Scioto to contribute materially to MTR's financial results in the near term, the addition of Scioto, coupled with our planned racetrack in Erie, Pennsylvania, would hedge our market position in the event of enhanced gaming legislation in either state," Arneault said.
For the nine months ended July 31, 2002, Scioto reported revenues of $9.6 million, and a net loss of $1.2 million. MTR recently revised its fourth quarter income projections to compensate for lower-than-expected revenues from its slot machines.
MTR said it would pay $32 per share for Scioto's 595,767 outstanding shares of stock. Scioto stockholders also have the option of receiving $17 per share and then 10 annual payouts based on 10 percent of the track's earnings before interest, taxes, depreciation and amortization.
MTR would like to complete the merger by next summer. When complete, Scioto would be a wholly owned MTR subsidiary.
The transaction must be approved by the Ohio Racing Commission.
"Our easily accessible location from I-70 and I-71 would serve as a great asset in a cross marketing program with Mountaineer," said Edward T. Ryan, who will remain as Scioto's president. Mountaineer is about 175 miles away.
Major racing programs conducted at Scioto's facilities include the Little Brown Jug Preview, the Scarlet O'Hara, the Pink Bonnet, the Ohio Sires Stakes events and Ohio Fair stakes events.
Laverne Hill will continue as the track's vice president and the merger is not expected to affect Scioto's employees.
Arneault said MTR planned to make "modest facility refurbishments" and expand Scioto's marketing efforts to attract more customers.
MTR also owns a casino in North Las Vegas, Nev., and a hotel in Reno, Nev.