Acquisition of the Newest Resort in the Bossier City/Shreveport
Market Expected to be Immediately Accretive to Operating Results
WYOMISSING, Pa.--(BUSINESS WIRE)--Jun. 19, 2018--
Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National” or the
“Company”), announced today that it has entered into a definitive
agreement to acquire the operations of Margaritaville Resort Casino in
Bossier City, Louisiana (“Margaritaville”) for approximately $115
million cash in a transaction that is expected to be immediately
accretive to operating results upon closing.
Timothy J. Wilmott, Penn National’s Chief Executive Officer, stated, “We
are pleased to partner with VICI Properties Inc. to structure this
tuck-in acquisition of Bossier City’s newest casino resort, which is
consistent with our criteria for transactions that are accretive to free
cash flow, strategically diversify our revenue and operating base, and
present well-defined paths to the realization of significant synergies.
With a purchase multiple of 5.5x trailing twelve months adjusted
earnings before interest, taxes, depreciation, amortization, and
management fees which we believe declines to below 5.0x with synergies,
Penn National believes this transaction further supports our efforts to
enhance shareholder value.”
Simultaneous with the closing of the transaction, Penn National will
enter into a triple net lease agreement with VICI Properties Inc. (NYSE:
VICI) (“VICI”) for the Margaritaville facility. The lease will have an
initial annual rent of approximately $23 million and an initial term of
15 years, with four 5-year renewal options. The rent coverage ratio in
the first year after closing is expected to be 1.9x and the Tenant’s
obligations under the lease will be guaranteed by Penn National.
The proposed transaction will further expand Penn National’s regional
gaming platform with a property that is complementary to its pro-forma
operating base following the completion of the Company’s pending
acquisition of Pinnacle Entertainment, Inc. (NASDAQ: PNK) (“Pinnacle”).
Upon closing the Margaritaville transaction and the pending Pinnacle
transaction (and taking into account announced divestitures), Penn
National’s portfolio of regional gaming facilities will increase to 40
properties in 18 jurisdictions.
Penn National does not anticipate that this transaction will alter the
Company’s expectation that it will end the year with net rent-adjusted
leverage in the mid-5x range, pro forma for the completion of the
Pinnacle acquisition.
Built in 2013, Margaritaville Resort Casino is the premier venue for
gaming, lodging, dining and entertainment experiences in Northern
Louisiana. The property features 26,500 square feet of casino space, 395
hotel rooms, an island-style escape theme, 6 restaurants and food and
beverage outlets, a 15,000 square foot 1,000-seat theater and 9,500
square feet of meeting space. Margaritaville Resort Casino generated
adjusted EBITDAM of approximately $44 million for the twelve month
period ended March 31, 2018.
The transaction, expected to close in the second half of 2018, is
subject to the approval of the Louisiana Gaming Control Board and other
customary closing conditions.
About Penn National Gaming
Penn National Gaming owns, operates or has ownership interests in gaming
and racing facilities and video gaming terminal operations with a focus
on slot machine entertainment. At March 31, 2018, the Company operated
twenty-nine facilities in seventeen jurisdictions, including California,
Florida, Illinois, Indiana, Kansas, Maine, Massachusetts, Mississippi,
Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania, Texas,
West Virginia, and Ontario, Canada. At March 31, 2018, in aggregate,
Penn National Gaming operated approximately 36,100 gaming machines, 810
table games and 4,800 hotel rooms. The Company also offers social online
gaming through its Penn Interactive Ventures division.
Important Additional Information
In connection with the proposed Pinnacle transaction, on February 8,
2018, Penn filed with the Securities and Exchange Commission (the “SEC”)
a registration statement on Form S-4 that contains a joint proxy
statement of Penn and Pinnacle and also constitutes a prospectus of Penn
(the “joint proxy statement/prospectus”). The registration statement was
declared effective by the SEC on February 28, 2018 and Penn and Pinnacle
commenced mailing the definitive joint proxy statement/prospectus to
their respective shareholders and stockholders on February 28, 2018.
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any
vote or approval. Shareholders of Penn and stockholders of Pinnacle are
urged to read the definitive joint proxy statement/prospectus regarding
the proposed transaction and any other relevant documents filed or that
will be filed with the SEC, as well as any amendments or supplements to
those documents, because they contain or will contain important
information. Investors may obtain a free copy of the registration
statement and the joint proxy statement/prospectus, as well as other
filings containing information about Penn and Pinnacle, without charge,
at the SEC’s website at www.sec.gov.
Copies of the documents filed with the SEC by Penn can be obtained,
without charge, by directing a request to Justin Sebastiano, Penn
National Gaming, Inc., 825 Berkshire Boulevard, Suite 200, Wyomissing,
Pennsylvania 19610, Tel. No. (610) 401-2029. Copies of the documents
filed with the SEC by Pinnacle can be obtained, without charge, by
directing a request to Vincent Zahn, Pinnacle Entertainment, Inc., 3980
Howard Hughes Parkway, Las Vegas, Nevada 89169, Tel. No. (702) 541-7777.
Forward-looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding the expected impact of the acquisition of
Margaritaville on the Company’s operations and statements regarding the
anticipated timing of closing of the acquisition. These statements can
be identified by the use of forward looking terminology such as
“expects,” “believes,” “estimates,” “projects,” “intends,” “plans,”
“seeks,” “may,” “will,” “should” or “anticipates” or the negative or
other variations of these or similar words, or by discussions of future
events, strategies or risks and uncertainties. Although the Company
believes that its expectations are based on reasonable assumptions
within the bounds of its knowledge of its business, there can be no
assurance that actual results will not differ materially from our
expectations. Meaningful factors that could cause actual results to
differ from expectations include, but are not limited to, risks related
to the acquisition of the Margaritaville operations by the Company and
the integration of the business to be acquired; the possibility that the
proposed transaction does not close when expected or at all because
required regulatory or other approvals are not received or other
conditions to the closing are not satisfied on a timely basis or at all;
potential adverse reactions or changes to business or employee
relationships, including those resulting from the announcement or
completion of the transaction; potential litigation challenging the
transaction; the possibility that the anticipated benefits of the
transaction are not realized when expected or at all, including as a
result of the impact of, or issues arising from, the integration of the
companies; our ability to realize potential synergies or projected
financial results; the various risks relating to the Company’s pending
acquisition of Pinnacle Entertainment, Inc., and other factors as
discussed in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2017, subsequent Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, each as filed with the United States Securities and
Exchange Commission. The Company does not intend to update publicly any
forward-looking statements except as required by law. In light of these
risks, uncertainties and assumptions, the forward-looking events
discussed in this press release may not occur.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180619005466/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
