30 March 2006

Great Canadian Gaming Makes Changes/Ratings Cut


Great Canadian Gaming Corporation confirmed today that it has made two major appointments at Flamboro Downs and Georgian Downs.

Bruce Barbour is GCGC's newly appointed vice president for racing operations in Ontario and will be responsible for the day-to-day duties at Flamboro Downs in Dundas, Ont. Barbour replaced former general manager Gerard Spoor, effective Wednesday (March 29).
In addition, Chris Roberts has been appointed as director of operations at Georgian Downs in Innisfil, Ont. Roberts replaces outgoing general manager Dominic Parravano.


Analyst reduces forecast for Great Canadian Gaming
by Derek DeCloet

Great Canadian Gaming Corp. moved to ease its balance sheet woes yesterday, but TD Newcrest analyst Damir Gunja isn't so thrilled with the result.

The Richmond, B.C., casino company has renegotiated covenants with its bondholders and bankers and will raise $80-million in fresh equity.

The good news: Chief executive officer and chairman Ross McLeod is putting up $50-million of it. The bad news: The terms are rather sweet. Not only will Mr. McLeod and other participants get 6.2 million shares at $12.89, a discount to the current market price, they'll also get a warrant for more shares that won't expire for two years.

The deal and the dilution sent Mr. Gunja back to his spreadsheets, and he took a hatchet to his estimates. Great Canadian will earn 37 cents a diluted share this year, he figures, a substantial drop from his previous estimate of 55 cents. Great Canadian in Toronto yesterday, putting the stock at times TD's profit estimate.

"GCD continues to trade at a healthy premium to its U.S. counterparts," which is "somewhat justified" because B.C. is a less competitive gambling market, Mr. Gunja wrote. But with worries about "management depth and credibility," the premium seems a bit too high, so he cut his rating to "reduce" from "hold" with a price target of $11.

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