WYOMISSING, Pa.--(BUSINESS WIRE)--Mar. 28, 2017--
Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National” or the
“Company”), announced today that it has entered into a definitive
agreement to acquire RIH Acquisitions MS I, LLC and RIH Acquisitions MS
II, LLC, the holding companies for the gaming operations of Bally’s
Casino Tunica and Resorts Casino Tunica, for total consideration of
approximately $44.0 million cash. With a purchase multiple of 3.7x
trailing twelve months adjusted earnings before interest taxes
depreciation and amortization (“EBITDA,” a non-GAAP financial measure
defined below) after master lease payments, and a lower post-synergies
pro-forma multiple, Penn National believes this transaction further
supports the Company’s goal of enhancing shareholder value.
Timothy J. Wilmott, Penn National’s President and Chief Executive
Officer, stated, “We are pleased to partner with Gaming and Leisure
Properties to structure this tuck-in transaction which will be
immediately accretive to our operating results upon closing. The
acquisition will add two complementary casinos to our existing Hollywood
Casino Tunica operations thereby presenting Penn National with the
opportunity to benefit from a centralized local management structure. We
intend to make modest cap-ex investments at the newly acquired casinos
to elevate the guest experience while implementing our Marquee Rewards
player loyalty program to allow guests to access Penn National’s growing
portfolio of properties including our Tropicana Las Vegas resort.”
Following the completion of the proposed transaction, Penn National will
operate both Tunica properties and lease the underlying real property
associated with these two businesses from Gaming and Leisure Properties,
Inc. (GLPI: Nasdaq) (“GLPI”) pursuant to the terms of the Company’s
existing Master Lease with GLPI, with total initial annual rent of $9.0
million subject to the provisions included in the terms of the Master
Lease. On a combined basis, Bally’s Casino Tunica and Resorts Casino
Tunica generated adjusted EBITDA of approximately $21.0 million for the
twelve month period ended December 31, 2016.
Bally’s Casino Tunica, the closest Tunica-area casino to downtown
Memphis, features a 40,000 square foot casino with 947 slot machines and
16 table games, along with a steakhouse, buffet restaurant, 24-hour
café, and a live entertainment venue. Resorts Casino Tunica, which is
located adjacent to Penn National’s existing Hollywood Casino Tunica,
features a 35,000 square foot casino with 800 slot machines and 9 table
games. The property also offers a steakhouse, buffet restaurant and
24-hour café as well as 18,000 square feet of meeting and event space
and a 201-room hotel.
The transaction, expected to close in the second quarter of 2017, is
subject to the approval of the Mississippi Gaming Commission and other
customary closing conditions.
In addition to GAAP financial measures, adjusted EBITDA is used by
management as an important measure of the Company’s operating
performance. We define adjusted EBITDA as earnings before interest,
taxes, stock compensation, debt extinguishment charges, impairment
charges, insurance recoveries and deductible charges, depreciation and
amortization, changes in the estimated fair value of our contingent
purchase price obligations, gain or loss on disposal of assets, and
other income or expenses. Adjusted EBITDA is also inclusive of income or
loss from unconsolidated affiliates, with our share of non-operating
items (such as depreciation and amortization) added back for our joint
venture in Kansas Entertainment. Adjusted EBITDA excludes payments
associated with our Master Lease agreement with GLPI as the transaction
was accounted for as a financing obligation. Adjusted EBITDA has
economic substance because it is used by management as a performance
measure to analyze the performance of our business, and is especially
relevant in evaluating large, long lived casino projects because they
provide a perspective on the current effects of operating decisions
separated from the substantial non-operational depreciation charges and
financing costs of such projects. We also present adjusted EBITDA
because it is used by some investors and creditors as an indicator of
the strength and performance of ongoing business operations, including
our ability to service debt, fund capital expenditures, acquisitions and
operations. These calculations are commonly used as a basis for
investors, analysts and credit rating agencies to evaluate and compare
operating performance and value companies within our industry. In
addition, gaming companies have historically reported adjusted EBITDA as
a supplement to financial measures in accordance with GAAP. In order to
view the operations of their casinos on a more stand-alone basis, gaming
companies, including us, have historically excluded from their adjusted
EBITDA calculations certain corporate expenses that do not relate to the
management of specific casino properties. However, adjusted EBITDA is
not a measure of performance or liquidity calculated in accordance with
GAAP. Adjusted EBITDA information is presented as a supplemental
disclosure, as management believes that it is a widely used measure of
performance in the gaming industry, is used in the valuation of gaming
companies, and that it is considered by many to be a key indicator of
the Company’s operating results. Management uses adjusted EBITDA as an
important measure of the operating performance of its segments,
including the evaluation of operating personnel. Adjusted EBITDA should
not be construed as alternatives to operating income, as indicators of
the Company’s operating performance, as alternatives to cash flows from
operating activities, as a measure of liquidity, or as any other
measures of performance determined in accordance with GAAP. The Company
has significant uses of cash flows, including capital expenditures,
interest payments, taxes and debt principal repayments, which are not
reflected in adjusted EBITDA. It should also be noted that other gaming
companies that report adjusted EBITDA information may calculate adjusted
EBITDA in a different manner than the Company and therefore,
comparability may be limited.
About Penn National Gaming
Penn National Gaming is a diversified, multi-jurisdictional owner and
manager of gaming and racing facilities and video gaming terminal
operations. The Company recently expanded into social online gaming
offerings via its Penn Interactive Ventures, LLC division and its recent
acquisition of Rocket Speed, Inc. (formerly known as Rocket Games,
Inc.). Penn National currently owns, manages, or has ownership interests
in twenty-seven facilities in the following seventeen jurisdictions:
California, Florida, Illinois, Indiana, Kansas, Maine, Massachusetts,
Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio,
Pennsylvania, Texas, West Virginia, and Ontario, Canada.
Forward-Looking Statements
The discussion in this press release may include “forward-looking
statements” within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. These statements can be identified by the use of
forward looking terminology such as “expects,” “believes,” “estimates,”
“intends,” “may,” “will,” “should” or “anticipates” or the negative or
other variation of these or similar words, or by discussions of future
events, strategies or risks and uncertainties. Such forward looking
statements are inherently subject to risks, uncertainties and
assumptions about Penn National Gaming and its subsidiaries, including
risks relating to required regulatory approvals and other conditions to
closing the acquisitions described herein, the successful integration of
such acquisitions and our ability to realize potential synergies or
projected financial results from such acquisitions, and accordingly, any
forward looking statements are qualified in their entirety by reference
to the factors described in Penn National Gaming’s Annual Report on Form
10-K for the year ended December 31, 2016, subsequent Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K as filed with the
Securities and Exchange Commission. All subsequent written and oral
forward looking statements attributable to Penn National Gaming or
persons acting on the Company’s behalf are expressly qualified in their
entirety by the cautionary statements included herein. Penn National
Gaming undertakes no obligation to publicly update or revise any forward
looking statements except as required by law.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170328005531/en/
Source: Penn National Gaming, Inc.
Penn National Gaming, Inc.
William J. Fair, 610-373-2400
Chief
Financial Officer
or
JCIR
Joseph N. Jaffoni / Richard
Land, 212-835-8500
penn@jcir.com
