Full House Resorts, Inc (NASDAQ:FLL) Q4 2017 Earnings Conference Call March 1, 2018 4:30 PM ET
Lewis Fanger - Senior Vice President, Chief Financial Officer and Treasurer
Daniel Lee - President and Chief Executive Officer
Chad Beynon - Macquarie Securities
Gary Ribe - MACRO Consulting Group
Good day, everyone, and welcome to the Full House Resorts’ Fourth Quarter Earnings Call. Today's call is being recorded. At this time, I would like to turn the conference over to Lewis Fanger, Chief Financial Officer of Full House Resorts. You may begin, sir.
Thank you. Good afternoon, everyone. Welcome to our fourth quarter earnings call. As always before we begin, we'll remind you that today's conference call may contain forward-looking statements that we're making under the Safe Harbor provision of federal security laws. I'd also like to remind you that the Company's actual results could differ materially from the anticipated results in these forward-looking statements. Please see today's press release under the caption Forward-Looking Statements for the discussion of risks that may affect our results.
Also, we may make reference to non-GAAP measures, such as adjusted EBITDA. For a reconciliation of those measures, please see our website as well as our various press releases that we issue including today. And lastly, we're also broadcasting this conference call at fullhouseresorts.com, where you can find today's earnings release as well as our SEC filings. And we actually just posted a few minutes ago the latest running for Bronco Billy's expansion.
So with all that said, we are ready to go. Dan?
All right. I mean, well obviously, it wasn't a great quarter. I hate to the blame weather, but sometimes the weather matters. Most significantly in this quarter Hurricane Nate went directly over the Silver Slipper. And it actually affected us for most of the week. I mean, we were closed for a good chunk of the weekend and actually had to evacuate the hotel because we're kind of end of the powerline and at the end of a single road. And if the road floods where the power goes out, we have light safety issues at the hotel.
The other casinos didn't, for the most part, have to evacuate. But we knew the storm was coming, and that was a key weekend and it's normally when there's a big cruising on the coast, car rally with tens of thousands of people. And midweek, leading into that the weekend, all that was canceled. The mayor told people to please leave town, the hurricane was coming and the hurricane actually came right over us and then moved on. And it actually did very little property damage to us. We got a little salt water in the swimming pools, that's about it. But it hurt our business quite a bit.
And then we had a lack of snow in Tahoe, the other end of the country. It's snowing now big time. Interstate 80 closed about 1.5 hours ago. They're expecting to get one to three feet at Incline Village and about five feet [indiscernible] and it's way fast time. I mean, I drove over splinter summer last weekend, just one of the passes leading in Incline Village last week not last weekend. And a year ago, it probably had 10 feet of snow on it and this year it had green grass, which is startling.
So I don't know if that's global warming or what, but last year, we had so much snow, we were complaining about being hard to get to. This year, we have so little snow, and I can tell you that too much snow is way better than too little snow. So we were hurt in Tahoe. And then on top of that, there were ice and snow storms in Indiana and Mississippi going into New Year's Eve weekend. And to put that in perspective, they don't have snow clouds in Mississippi. So when they get a little bit of ice, they just close roads. And so it was a pretty rough quarter.
Now our revenue despite all that was only down 9%. Our EBITDA was down like 40%, and it's an off-season quarter, so little small swings, plus big percentages. If you look at the absolute dollar numbers, though, our revenues were up about $400,000 and our expenses were up about $1.4 million, which is not a great scenario, but not as bad as it first appears. This came on the tail of three very good quarters where our revenues grew nicely and our EBITDA grew nicely. And when you put it all together, you ended up with kind of a lackluster year.
Well that prompted us to start the New Year with kind of a focus on becoming more efficient. If you look at our margins, they could be better. If you compare them to most other casino companies, it's pretty obvious. Some of that is like Tahoe is rented from the Hyatt people, so there's a capital cost that's taken out before you get to EBITDA, which distorts things a little bit. And at Rising Sun, we have kind of a large footprint to operate. And until we get revenues better, it's going to have low margins. But even if you adjust for those things, we think we can do better.
We started the process to be smarter about scheduling our people. We're targeting to reduce our payroll cost by about 10%, and we think that's doable. We haven't really focused on this as well as we should have before. We're also looking for ways to improve service while reducing cost. I'll give you a simple example and it makes a good example when there's other things we're looking at.
We operate the buffet at Rising Sun for breakfast. It's pretty expensive to operate a buffet, and at breakfast, it can look that great. You get there and have scrambled eggs and then sit there for a while and so on. Most of our breakfast customers are comped anyway. It's people staying in our 300 hotel rooms. And we've determined that if we go to an a la carte breakfast, which is frankly what we do down for Silver Slipper, we give people better quality and it's cheaper for us to operate.
And so there will be – so we're transitioning in the next few weeks to an a la carte breakfast, which, for the most part, will still be comped for people [indiscernible] breakfast. And that saves us about $200,000 a year. So it's a great example of how we think we can actually provide better service at a reduced cost. And another area we're going to look at is our leased and participating slot machines.
We spend about $350,000 a month to the slot companies for leased and participated games. You can't live without any of them, because a lot of times, most of the more popular games and to be competitive, you have to have them. But we're going to examine whether we have to have that many of them. And so maybe instead of having eight Wheel of Fortunes, we'll have six. And we'll try to focus on making sure that where we have a leased participated game, we have own games surrounding it.
And we may do promotions that we have tops on top of only the owned machines. So you get double points, but you won't get them on leased and participating slots. When the slot companies are our friends than they are our enemies and then they provide us new and better machines all the time, but then they put their hands in our pocket. And if you look at that $350,000, that's $4 million a year. For us, that's a pretty big number. And if we can reduce that by 10% it swings the numbers. And maybe we can do a little better than that. So we're trying to continue to do leased and participating slots, but try to do it in a smarter, more careful way.
And so that's something. There were two major improvements that we did last year that recognized don't help us in the winter. Both of them open later than we would have liked, but they're done. One is the RV Park at Rising Sun, which opened in late August. Obviously, it's closed in the winter. It'll open later this month. And RV Parks are summer seasonal business, so we think that will be a nice asset for us in the second and third quarters and help generate growth. The other one is that Beach Club down for Silver Slipper. They don't have snow clouds and nobody wants to set out our Beach Club in the winter.
We'll start to warm up there and think it was 83 at St. Louis today, and so the pool will open later in March as well. And again, that should help us in the second and third quarter comparisons. We also made great progress on the other improvements we're doing around the company. I'll start with the smallest one up in Ballwin, with both the new porte-cochere and everything we've been waiting for the temperature to get above 40 degrees, so we fixed the stucco and take down the scaffolding and opened our new entrants. And that we think will be done next week. It was going to be done this week, but a cold snap has gone through and the stucco can't hear it under 40 degrees.
So that porte-cochere and entrants been a long time coming, frankly too long, but I think the finish line is now in sight. At Rising Star, if you've watched the news, you can see the Ohio River has been at flood stage. It's the highest it's been since 1997, so it's kind of a 20-year flood.
Our property is fine, but the roads flooded the other day, we had to close for about 36 hours. That's less than some of the other [indiscernible] has been closed for several days. Now was it Sunday, so it wasn't a good thing. But rivers receding now and as I said we didn't do any damage to the property at all.
But we now after – got two years of effort, finally the Corps of Engineers has told us that they have completed all their processes. They’ve conversed with all of the state historical preservation offices in both states and the Environmental Protection agencies in both states and the local Indian tribes and whoever oversees the bats with dots on their wings and stuff like that.
And they have seen no reason not to issue our permit and they expect to issue our permit no later than mid March, two weeks from now. So we have spooled up ready to go, build the roads and the ramps as soon as the issues that permit and then some of the work we can actually start before that some of it's above the flood zone.
And of course the cornfield that the road goes across, the moment under a couple feet of water, but by the time we get to mid-March you probably won't be under a couple feet of water and we can build that and recognize that cornfield has not flooded in many years. This is really a very rare event that there have been floods and the road is designed so it does what the road will be fine.
But – so if the quarter follows what they told us and we hope it will, I actually am planning, if they don't to be in a pop tent in front of the Corps of Engineer office in Louisville on March 16 and I will sit there until they give us the parking permit. But assuming they come true on their word, we will have this done by July 4, weekend. The boat itself is done.
The boat has two components. There's a push tug and we opted to purchase a newly built one. That's an in a shipyard in Cincinnati. And then, the ferry, which is really a custom design barge and it, has ramps on the ends, but go up and down to allow cars to get on and off and that was newly built in a Jacksonville, Florida shipyard to our specifications. And it's working its way up the intercoastal canal system to Cincinnati and should be there in a couple weeks.
And then the shipyard in Cincinnati just puts it together. There's a little attachment they do. And so by the end of March, the ferry boat is ready. And then we have to hire a captain and crew and they have to practice and so on, all of which will take place while the road and the ramps are being built.
When this is done, it's pretty big deal for us, and particularly, for Rising Star because 120,000 people in Boone County, Kentucky, which is directly across the river from us. Today, they have to drive around and take bridges and drive past other casinos to get to us. With this ferry boat, they won't.
And so it makes us physically closer to a lot of people. I can tell you from our slot system, the people who live on our side of the river near our casino. We receive on average about $150 per person per year. And the people directly across the river 2,000 feet away in that ZIP code, we get something like $4 per person per year. And so the ferry boat would be a pretty significant plus.
At the same time, we are fixing up and doing the first significant improvements to the Pavilion, which is kind of where you arrive and should come to the casino. And we have a large fake trees at least 10 of them. We have new flooring, lighting, carpet, wallpaper, lobby furniture, et cetera. It's all at purchase stage and ready to go in and will start in April. And so we will have significantly refurbished the arrival by the time the ferry service begins in early July, so a lot of exciting stuff coming at Rising Star.
And I think as it pulls away from operating close to the breakeven point, you'll see margin improvement there as the revenues go to the bottom line. We are – it's kind of a progressive tax rate in Indiana, and we're in the lowest tax tier with lowest tax tier of any casino in the state. And so as our revenues improved, quite a bit of it falls to the bottom line.
Then most excitingly in Colorado – in Cripple Creek, which is outside of Colorado Springs, we have a project we announced a couple months ago that has the potential to double the size of the company.
And we've been doing a great deal of work we’ve been working with the development staff of the City of Cripple Creek, which is really actually a small town and trying to resolve any and all concerns they have before we make the formal submittal.
We think we accomplished that we're planning to submit formally on Monday. We have additional renderings that we've produced to show them what it looks like every angle and these are on our website now. We have a Facebook. It's on our Facebook page, right.
And was quite exciting and we think it helps Cripple Creek attract more people in Colorado Springs maybe even from Denver. The gaming per capita in Colorado springs is very low and then Denver’s also low both of the cities are growing in leaps and bounds and we think this takes Cripple Creek and Bronco Billy's to a new level.
I mean just to put it in perspective, there are several Casinos in Blackhawk that make more than 20 billion a year and the gaming commission produces the combined income statement for each market and the EBDIT of the entire Cripple Creek market is only 20 billion a year for about five of that.
And so we think if we build it into a more significant Casino, we will have a very big impact positively and Cripple Creek as well as on our Company. We've had four public hearings there in Cripple Creek a couple weeks ago describing the project to anybody in the community you wanted to listen, took questions from them.
We hope to go in front of what they call the Historical Preservation Committee in March seeking their recommendation. They make a recommendation the City Council. City Council does not have to follow that but obviously it's easier at City Council with you have the backing of the Historic Preservation Commission. So we hope to have that.
And then we go to City Council in April and frankly, judging by the public hearings and the conversations we've had to date, we're optimistic that our project will be approved. The key thing that we need really as we've assembled the slant and it has a public street and a public alley that kind of bisector and to build those we need those vacated it's a couple other things but that's the one issue that is very important to us and that there's very little traffic on each of those at the moment. And judging from all the conversations I don't think it would be a problem.
We did provide a traffic study that showed that there's very little traffic on those rights of way and that the traffic can easily be accommodated by other streets. Assuming all of that happens in April. We are going to be ready to start construction of the first phase beginning in the May.
The first phase is a parking garage, but 270 parking spaces with relatively small parking garage. But most of our competition in Cripple Creek parking garage and we don't have said we have loads of surface parking lots and those surface parking lots where we're going to build the hotel.
So since we're going to continue to operate the Casino throughout the process, we want to first build the parking garage, so our customers and employees have a place to park. And then will that parking garage, we hope to finish at or about year end and then we can roll into starting construction on the hotel. Obviously the bulk of the expenditures on the hotel and the spa, it’s a Casino refurbishment that comes with that and so on.
And we don't have a final number yet, but it's probably in the ballpark of $100 million all in, maybe we can do is a little less than that, but just if look at a 200 room bay, four star hotel with a high end restaurant refurbishment of about 20,000 square feet of Casino space that's the number you're kind of driven to.
And we would arrange the financing for the bigger project while we build the parking garage, parking garage much smaller number do that largely out of cash flow. And basically we think we're off to the races. We will make the formal filing on Monday, city council. April, start construction on the garage. In May, work on arrangement with financing. I don't want to arrange the financing today and then have to pay interest for six months while we build the garage. So we'll figure that out where the capital markets are going to fall. And then, we can be open roughly mid-2020.
Now that's not the only thing we look at. We still intend to try to relocate half of our gaming capacity out of the Rising Sun. We're permitted to have far more gaming capacity than we need. We've had several proposals, but we've been actively talking with [Fairhope] and continue those discussions. That requires a change in the Indiana state law. The Indiana legislature meets every year. But on even years like this one, it's a shortened session and they only take up fiscal matters.
Sometimes they'll sneak something else in, but something as controversial as this will get a full discussion. And so we opted not to push it in this session. And they're all distracted as well, because the racetracks outside of Indianapolis are being sold for a very nifty price by the way and so let that transaction happen. I think everybody's kind of afraid if they allow a casino in Terre Haute that might rock the boat.
And it's such a short session anyway. So I think even apart from that transactional this was supposed to be to push it. But the next year, I think we have a pretty good shot at it in Terre Haute. No freaking idea how we feel about it at the moment. It's a pretty big project, but we'll figure it out down the road. And there's frankly other stuff we look at all the time. But that's quite a bit on our plate that I just outlined there.
Lewis, did I forget anything?
No, Daniel, the other thing is we have a brand new debt.
Yes, please. Talk about that. That's actually really important.
So on February, we effectively refinanced all of our first and second lien debt with our brand-new senior secured notes, very excited to have those in place. We have a great group of new lenders. Our interest rate just based off of current rates will stay in the ballpark of $1.2 million this year just on interest expense alone. There is also the mandatory amortization that happens every quarter. And under our old facility, we were paying about $563,000 a quarter until July 1 of this year when it was going to go up about $844,000. Under our new notes, it's $250,000 a quarter. So it's significantly less there, and we'll use some of those savings to plow into some of these projects and to these growth projects. So very excited there.
Well, it’s actually equally important, the lenders in this are big blue-chip firms. Are we allowed to say the names of the firms?
Some people have figured it out from the signature pages and the indenture.
Okay. One is to guard which is part of the Power Corporation of Canada [indiscernible] among other things. But the largest is actually PIMCO. I think it's the largest single bond fund in the world. And then the third one was. That's right. And for these really big firms, they normally wouldn't do a deal this small or the company this small. And I think part of what attracted them to it is they know that we want to finance this project at Cripple Creek and so the deal is structured in a way that's pretty easy for us to do add-on notes.
There's no certainty that they will agree to buy those notes, but it's structured so it's easy to do once we have provided to them forecasts and construction contracts and all that stuff. And recognize it's much better to have lenders who are griping about how small their exposure is versus a real deal which had a bunch of tiny banks on it were always griping about how big their exposure was to us. And so that was a pretty important deal for us in many different levels. If there's there anything else, I might look around the table here.
I think we are good. You want to do some Q&A, Dan?
We’ll take some questions.
By the way, I saw 4,000 shares of our stock traded today [indiscernible] can’t buy some stock. The stock doesn't trade much. That would explain some of the volatility.
[Operator Instructions] First we’ll take Chad Beynon from Macquarie Securities. Your line is open.
Hi, good afternoon. How are you?
Good. How are you?
Good. Congrats on the debt deal, very attractive rates, great to see that that's over the goal line. So with that kind of behind you and you've outlined the Cripple Creek project and we've seen the renderings then and you project a 2020 opening, if everything goes as planned.
How do you think about the returns on an asset like that versus potentially acquiring some of the smaller assets that all of your regional gaming peers are looking to divest and really just bring in the current EBITDA plus the synergies and have good current free cash flow versus a bigger projects like a Cripple Creek, which will take a lot more time design, maybe have a little bit more risk and open in a couple years? Thanks.
Yes, good question. When I look at these projects at least my head, I'm usually looking for about a 15% cash and cash return. And so we invest $5 million in something we expect to make [$50 million] in cash flow of it going forward. And when I look at stuff being bought and sold, it’s nine, 10 and 11 times cash flow.
And in a lot of cases, they might be buying the stock of a Company and getting the reduced tax basis. So they don't get the full tax shelter as when you build something new, you get accelerated depreciation on it. So the returns are even better than that. If you take the inverse of 15%, it's like a fixed multiple. In the new asset, there is more risk, no question.
But I think the extra return we hope to get offsets that risk. Now that doesn't mean we wouldn't acquire something, after all we did acquire Cripple Creek and we bought it for $30 million that $4.8 million last year last year in EBDIT, when we bought it, we had assumed $5 million that we were a little bit off, but not much. And that that’s a pretty good multiple and on top of that, it had a great growth opportunity.
We knew it had some excess land. Turned up the market, better market than we thought it was when we get into it. We started looking at the places like Blackhawk do. So we do look at acquisitions. If somebody wants to sell us something with good growth opportunity at six times cash flow will jump on it right away.
And we do look at an awful lot of things. And some of them frankly are we've looked at some deals that were just – they were really good deals that we wanted to do. But if it would've been betting the company, we're not willing to bet the company on something. We looked at some other deals. There was one deal that we thought was a really good deal and it turned out to be too small.
They had less than 50 employees and they didn't provide a health plan for their employees and lately due diligence we figured out that if we acquired them, we would have to give them a health plan because we had more than 50 employees and that hurt the earnings of what we would be buying and we went back to the seller that we need an adjustment in price. They wouldn't adjust the price. So we didn't go ahead. So we look at stuff.
And I guess you look at where do we go someday or we have buyer or seller, we're going to work everyday and try to create shareholder value and I love to see companies get sold 10, 11, 12 times cash flow.
And what's funny is, as some of you may know, I was a sell side analyst specialized in casinos back in 1980s, right? So I did what Chad does. And back then, I used to say casinos are worth six to eight times cash flow and the prime rate 10%. And Steve Wynn built the mirage with 14% money and so on.
And I watched over the years, interest rates came down dramatically to like the lowest in our lifetimes and people still are talking about casinos being worth six to eight times cash flow. And it's only recently you started to see 10 times, 11 times. [Indiscernible] was like 10 times, some of those. And it was like geez, it's about time. Because if you ran the math, if you could borrow money at 4%, 5% and 6% and go acquire a casino company at 10 times, obviously it works. And so I've always had that out there and frankly, I think that's probably the upside.
Chad on to that chasse. I'll tell you, there isn't today in fact there's a [indiscernible] right now for casino looking to get sold. So there's always stuff out there to buy, but I'll tell you when you look at this Bronco Billy's expansion, it to us is a bigger – the investment rationale for that project is bigger to us and better to us than we were at Pinnacle looking at what barriers to lock.
When you look at the gaming spend metric that of Houston heading into Lake Charles and compare that to the national average, those numbers back in the day indicated pretty strongly that Houston was underserved. When we look at Colorado Springs in that broader market now with Bronco Billy's, it's even more underserved. And so I'll tell you, there's – the level of excitement that we have for that project is – I don't want to speak for you, Dan, but I would say it's probably unparalleled given our…
And frankly, the best of Pinnacle on the map, I think this one puts us in the map.
Okay, yes, well said. And then moving down to Silver Slipper. You mentioned weather obviously impaired your results this quarter. You would have I guess three, maybe even four straight quarters of some really good growth. Outside of that incident that kind of weather weekend, was the business still humming along? And as we look at 2018, you mentioned obviously the new amenities that will help bring customers to the property. But is there any reason why we can't kind of return to some of the growth rates that we're seeing before the weather impaired the property?
Yes. I think it's still doing pretty well. If you back out the iffy weather. We had some rocky weather in January as well. But I would tell you last weekend was one of the best weekends in the history of the property. And the outlook for March is pretty good. So I think the property is doing just fine. And in fact, we have designed an expansion for it that if you've been to the property and I know you have, Chad, but for anybody else on the line, there's kind of an abandoned pier that sticks out into the Gulf of Mexico in front of us. And it was kind of demolished by Hurricane Katrina.
So it's been there 15 years. It's a bit of an eyesore. And everything we have there is kind of squeezed in seven acres. And so we are designing with Brad Friedmutter, a hotel expansion that would go where that pier is. In other words, goes out over the water. And with that, we'd build some meeting rooms and conventional rooms which probably have none at the moment. And so that would help fill the new tower and also give us a place to host entertainment and stuff. That's a very long range process, because the water itself in that pier is owned by the state of Mississippi.
And John Ferrucci and I went and met with the Secretary of State that kind of tick his spots on the idea of leasing us some bottom in the Mississippi for us to build a hotel tower. He's open to the idea. It also takes kind of Engineering permit, which we have a lot of experience with. We know it takes a long time. It takes a bunch of environmental approvals. And if we do that, we're going to need some more parking so we will also seek permission to fill in some of the wetlands. Our lease has an awful lot of wetlands. And it's not like it's sensitive wetlands where ducks go and have their ducklings. It's in fact got mosquito ditches carved into it and so on.
And the way you get permission to fill some of that in is to agree to buy some truly more sensitive wetlands somewhere else and put it into trust so that soundly environmental land is kept soundly environmental and something like this is a lot to be filled in. But it's a long laborious process. This is something that will take years. But we have started the process, because we think the property can support a hotel addition, and we also think that getting the entitlements to build that increases the value of the company.
So there's no reason not the start process, even though it will be lengthy and I have no idea of the date, which we could break ground so far out, but we are starting the process, because we think it's the right thing to do for the property. Otherwise, we're shaping up for a good summer.
We have Island View is going to add an expansion in June, but we think we're fine. We don’t think that’s going impact us. And I think we’re in pretty good share. We have the closest white sand beach to New Orleans and Baton Rouge.
It gets really hot in New Orleans and Baton Rouge in the summer, and this is the first summer where we've actually had amenities where we can tell people to come out and sit on the beach and enjoy a Margarita and maybe play a slot machine. So we're looking forward to doing that.
To help make it a little more concrete for you Chad, this past Saturday, now that we're filing out of the big chiller as we call it around here, slot win was at its best in over four years. This past weekend, our guest counts were up 7% for this weekend, compared to prior year. So we feel good with these weather effects starting to disappear down there.
Great. Okay, the last one just going back to Cripple Creek, the process and so I don’t know if you want to handicap it on the line, but what would really be the reasons, while the city council would not want a project like this and Jobs and Tax revenues in the market.
Are there other factors that we might not be aware off in terms of traffic congestion or something else or I don't know if you're willing to handicap it on the line or maybe just point out some of the reasons why the city would not want this to go through, just trying to figure out the probability of this going through?
Well, I handicap these things all the time like I've pointed out Terre Haute is something we're working on, but it's a long shot right, and we'll continue to work on it, but it's a long shot. This thing in Mississippi, I think we can eventually get permissions, but it's a long ways down the road.
In Cripple Creek, this is a very fast process, I mean, it's a small town. This is exactly what the town needs. I think in general, it's what the people want. I have attended – I don't know half a dozen City Council meetings now. We have these public meetings. We're not allowed to talk directly to any of this City Council people under the laws and rules of Colorado I guess it is.
But I mean I have ex-City Council people coming into me all the time, saying this is great. This is exactly what we need. And there really is no reason not to approve it. I mean the streets were seeking to close or streets that are not used anyway. One of them is an alley behind Bronco Billy's that has dumpsters and stuff on it, pretty all that up.
The other one is Second Street, but half the time, Second Street is closed for a beer tent that we put up for different festivals and so on. So not used much anyway, the ordinance calls for buildings not to be more than five stories tall above the adjoining Historical Street, and then it lists a bunch of Historical Streets.
And so we took that domain. We can be five stories above the Carr, have a hilly town and Carr is like 20-feet higher than Bennett. And so technically, the lobby of our hotel is a walkout basement of five-story building that’s a Carr. And people in the city were like the Carr. That's actually six stories above Bennett.
Yes, but read your ordinance, that's actually permitted. And people were like, yes? And we pointed out that Double Eagle did exactly the same thing. And so out of an abundance of caution, we just said, you know what, we'll just seek a variance, so that we can be six floors above Bennett.
So if somebody files a lawsuit down the road saying you can't be more than five stories above Bennett, we'll have a variance. I can't imagine why we wouldn’t get it, don’t even think we need it to be honest when you read the ordinance. So we're trying to be very careful here in case some competitor tries to sue us on anything, but I don't think we given them any cause to sue at all. I don’t think there is any reason for the town to say no.
In terms of traffic coming into town, it’s a big four lane road coming out of Colorado Springs. You get to a town called divide. There's traffic signals there were people how to turn left. That would be the pinch point, if you will, because at that point, you turn to a two lane road. If you look at the capacity of that intersection and mono traffic will be generating doesn’t even move the needle.
And then, for Mary Drive for 20 minutes over kind of a mountain pass and two lane road and as you come into town, the street start off split off some people stop at the Wildwood. And so something prepared in the Wildwood and we will further down some people call into Double Eagle different streets they're all right turns so there isn't a chokepoint in the traffic really at all.
And we have a big traffic study that shows all that. And so closing Second Street shouldn’t be controversial, the height shouldn't be controversial, probably the biggest thing people complained some of our guest transfer glass windows. And we're like, well, okay, so we reacted, what you want we could it be a little bit kind of gold because gold part of the town, will sure, we can do that.
They were like what about can you do this? And for the most part, you can see that glass, because the lower parts of the building are kind of done in brick to resemble the rest of the town and the hotel itself is kind of hidden behind Bronco Billy's which is a historic building and some new structures we're building that are historic looking.
And so we’ve addressed those concerns. Honestly, there's no reason for the town to say no. And I don't expect them to say no. Now we have a pretty aggressive time schedule but April slip into May, but I frankly be astounded if were approve for this project. I’ve been careful the land we've acquired it’s under option. So I haven’t – we haven’t actually committed much money. So if we want to approved we would just will help and but I am pretty sure will be approved and I think will be approved in April.
Okay. Very clear. Thank you, Dan. Thank you, Lewis, best of luck.
[Operator Instructions] Next we will go Gary Ribe from MACRO Consulting. Your line is open.
Yes, hi, Dan, hi Lewis. How you guys doing?
I don’t think you guys mentioned this, but at some point on the last quarter you guys that filed fairly deepen size mixed shelf. And I’d just kind of curious, you mentioned kind of in the fall kind of getting going on Cripple Creek what time of capital structure, how might you effect that you might that expect to effect the capital structure and kind of what would the mix look like as you get going with that?
Don’t know the mix shelf was a little bit of the function of century casino as a competitor of ours in Cripple Creek and other smaller company. They're actually pretty similar to us in size, but they have more equity less debt, so they have a bigger market cap. And they had filed the shelf, and then several months later, they did an equity deal and raised that $30 million.
And literally, I asked Lewis, are we big enough to file a shelf. And he came back and said you have to be $75 million at market cap, not including shares held by the board and the management. And we were just above that number. And so we ran out and file the shelf to get it on file when we qualified and thought that the SEC might give us a full review and stuff they reacted very quickly and approved in early January.
We size that to be big enough that if we hadn't gotten there with the lenders of our new notes, we could have entertained doing bonds or something under the shelf as it turned out, we didn't have got there successfully and shelf stay out there for us to do stuff.
And as you know Gary that those were $100 million in size…
Yes, that’s a $100 in size. So that’s why the shelf is a big us it is. Now down the road again I this is tentative number of $100 million and what those think cost and Cripple Creek I would love to less both somewhere in that ballpark, when you go to advance that, we're pretty levered company I doubt we can do it follow with that. But we could probably do a lot of it, but will figure out where that markets are later this year.
Do you do it with the shelf? We could do a combination of debt and equity. We can do equity. We can do a convert, just about anything. And it was – so we filed it just to have the flexibility to do publicly traded securities of any kind universal chef and the size that was structured if we had to do it to refinance at the old that we could.
And it's a three-year shelf as well, Gary, pretty standard. So if you wanted to the extreme, taking out these notes in three years, we could always do that with unregistered securities as well. So it was meant to be a little forward thinking, but also that encompasses our current debt.
Yes, I've even had a couple of overtures and whether we'd be willing to partner Bronco Billy's. And but I think when you go through that it's ultimately – that is good for our shareholders as it would be if we can do it on our own.
That makes complete sense. Thanks for the color on that. If you do need to raise some equity for Bronco Billy, I guess as a shareholder, being able to participate via rights offering or something might – I think you probably have good appetite among shareholder base?
I appreciate that. We did do a rights offering year and a half ago, which was pretty successful and I backstop it, and I think it worked up over everybody. And I hear that – we figure it out when – this is ways down the road. But that the real financing for Bronco Billy is a ways down the road figure it out in time. We keep right our stocks are so volatile. We were $4 a share when we filed the shelf. And we dropped almost to $3 a share, which percentage wise is a huge way.
Good job in everything else. That’s it for me. Thanks.
Yes, thank you.
End of Q&A
And we have no further questions in the queue. I'd like to turn it back to Dan Lee for any closing remarks.
And actually, I'm just – two closing remarks, one is, we forgot to mention that we moved back the maturity date of the debt, so we are now from…?
From 2019 to 2024.
Okay. So Lewis is well-sleeping well at night lately. And then second, on the rights offering last time, it was only $5 million. So it was fairly small rights offering. But one of the down sets the rights offering is we don't introduce new shareholders, and at some point, we kind of like to maybe broaden the flood, and then when the stock on the trades 4,000 shares a day. We hear from all sorts of people saying, we'd love to buy your stock, but we can't seem to figure out how to get.
And so you kind of juggle all those one against the other. I mean, even if you did do an underwritten public offering about the times you can do it the way that shareholders can still participate, but than the fees are higher, because they typically have an underwriter in all that stuff. So we weigh all those things.
And I will point out I think other than institutions, I think I'm probably larger single shareholder. So I’m very motivated by figuring out what's best for shareholders, because I'm one of them. I guess that's it.
Daniel, go ahead.
All right. Thank you very much everybody. Take care.
And that concludes our call for today. Thank you for your participation. You may now disconnect.