Gateway Casinos Income Fund

Gateway Casinos Income Fund

March 19, 2007 19:07 ET

Gateway Casinos Announces Final Adjustment to Purchase Price for Cascades Casino

BURNABY, BRITISH COLUMBIA--(CCNMatthews - March 19, 2007) - Gateway Casinos Income Fund (the "Fund" or "Gateway") (TSX:GCI.UN) today announced that it intends to issue 546,571 additional units of the Fund to satisfy the final purchase price adjustment provided for in the Cascades Langley Casino and Hotel ("Cascades") acquisition agreement which was executed in April 2006. The issue of the purchase price adjustment units is subject to the receipt of all necessary regulatory approvals, including approvals necessary for the listing of the units on the TSX.

The acquisition agreement for Cascades provided for an adjustment to the purchase price of up to $10.6 million, or 10% of the initial transaction value, if the actual distributable cash generated by Cascades for 2006 was greater than the then estimated distributable cash. For the 12 months ended December 31, 2006, the parties have agreed and determined that Cascades generated distributable cash of $12.3 million, or approximately 14% more than originally estimated and upon which the original purchase price was based. The distributable cash determination was audited by Gateway's auditors.

In accordance with the procedures prescribed by the acquisition agreement, the Fund will issue an additional 546,571 units at a price of $19.44 per unit, which was the 10-day volume weighted average trading price of units of the Fund for the period ended on March 16, 2006, as determined by Gateway's financial advisors. Following completion of the additional issue of units, the Fund will have a total of 31,656,933 units outstanding.

A committee of independent trustees reviewed the calculation of the number of units issuable by the Fund pursuant to the Cascades acquisition agreement, based on the determinations of distributable cash and the average trading price of Fund units.

Operations at Cascades have continued to exceed projections since it was acquired. Total revenue exceeded projected revenue by 16.7% in the fourth quarter of 2006 and 8.3% since acquisition, driven mainly by strong slot revenues.

In addition, the Fund also announced that the 676,910 units of the Fund and distributions relating to those units, which have been held in escrow since the closing of the acquisition for the purpose of satisfying any potential downward adjustment to the purchase price if the Cascades acquisition did not meet expectations, will be released from escrow contemporaneously with the issue of the purchase price adjustment units.

Gateway Casinos' Dave Gadhia commented, "We are pleased that the financial results from Cascades for the past year exceeded our initial expectations and that the transaction provided even greater accretion to our unitholders than we had originally anticipated."

About the Fund

The Fund is an unincorporated, open-ended limited purpose trust established under the laws of British Columbia, which operates the Burnaby Casino and Cascades Langley Casino and Hotel in Greater Vancouver, B.C., the Palace Casino in Edmonton, Alberta and the Lake City Casinos in Kamloops, Kelowna, Penticton and Vernon, B.C. Headquartered in Burnaby, B.C., the Fund is one of the largest casino operators in Western Canada.

Forward-looking Statements

This news release contains forward-looking statements that reflect the expectations of management and the Board of Trustees regarding the future activities of the Fund and its subsidiaries. Forward-looking statements typically contain words such as "believes", "anticipates", "continue", "could", "expects", "indicates", "plans", "will", "may", "projects", "would" or similar expressions suggesting future outcomes or events, although not all forward-looking statements contain these identifying words. Such forward-looking statements reflect the current beliefs of management and the Board of Trustees based on information currently available to them. Forward-looking statements involve significant risks and uncertainties, and the Fund cautions readers not to place undue reliance on these statements as a number of important factors could cause the Fund's actual results to differ materially from the beliefs and expectations expressed in such forward-looking statements. For a discussion of the risks faced by the Fund which may cause actual results to vary refer to the Annual Information Form of the Fund dated March 31, 2006, commencing on page 47. The forward-looking statements contained herein are made as of the date of this news release and are expressly qualified in their entirety by this cautionary statement. The Fund undertakes no obligation to revise these forward-looking statements to reflect subsequent events or circumstances.

Distributable Cash

Distributable cash is not a defined term under Canadian generally accepted accounting principles, nor does it have a standard, agreed upon meaning. As such, the Fund's distributable cash may not be directly comparable to distributable cash reported by other income funds or similar issuers. Distributable cash is presented because the Fund's policy is to pay distributable cash to unitholders on a monthly basis to the maximum extent possible. Management believes that distributable cash is a useful measure as it provides investors with an indication of cash available for distribution. This non-GAAP measure is intended to provide additional information about the Fund's performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

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