Corrects previous error on dividends
Dover Downs Gaming and Entertainment has received a modification of a $60 million line of credit loan with three financial institutions in Delaware.
The loan with WSFS, PNC and Citizens Bank had been slated to expire on Aug. 15.
Concern over the loan may have contributed to the stock trading at or near a 52-week low this week at less than $1.20 a share. The market capitalization of the company (total value of the stock) is under $40 million.
The amended loan comes with a number of conditions that include reducing the outstanding balance and meeting specified financial standards.
Dover Downs has been hammered by casino competition from neighboring states, with Maryland slated to build additional venues in the Baltimore and Washington, D.C. areas. Maryland casinos are not saddled with the costs of operating horse tracks that also face financial struggles.
Delaware was the second state in the region to allow gaming. The first, long-time gambling mecca Atlantic City is struggling with the added competition, with one casino hotel closing earlier this year and three others likely to shut their doors in the fall.
Unlike the state’s other two racinos, Dover Downs invested heavily in becoming a destination casino, with the construction of a luxury hotel and conference center. That contributed to a debt load that is weighing down the publicly traded company.
The company has stopped paying a dividend, due to the losses.
The General Assembly granted millions of dollars in financial relief to Delaware casinos, which are laboring under one of the nation’s higher tax rates.
However, a tight state budget did not result in any measures to provide long-term relief.
Click here to read a regulatory filing on the modified loan agreement.
