Recently Renovated Iconic Asset Establishes Attractive Las Vegas
Strip Destination for Penn National’s Regional Gaming Customers
WYOMISSING, Pa.--(BUSINESS WIRE)--Apr. 29, 2015--
Penn National Gaming, Inc. (PENN: Nasdaq) (“the Company,” “Penn
National,” or “Penn National Gaming”) announced today that it entered
into a definitive agreement to acquire Tropicana Las Vegas Casino Hotel
Resort (“Tropicana Las Vegas” or “Tropicana”) from its shareholders, the
largest of which is a partnership between Onex and Alex Yemenidjian, for
$360 million. Penn National intends to fund the acquisition through an
expansion of its existing credit facilities and cash on hand.
Tropicana Las Vegas is situated on a 35-acre land parcel at the corner
of Tropicana Boulevard and Las Vegas Boulevard, approximately 2.5 miles
from McCarran International Airport on the southern end of the Las Vegas
Strip. The iconic property features nearly 1,500 guest rooms including
181 suites (of which six are luxury villas). Amenities at the property
include a 50,000 square foot casino with over 1,000 gaming positions, a
sports book, three full service restaurants, a food court, a 1,200-seat
performance theater, the 300 seat Laugh Factory comedy club, over
100,000 square feet of exhibition and meeting space, a five-acre
tropical beach event area and spa.
Over the past four years, Tropicana Las Vegas completed over $200
million of property upgrades including a complete renovation of all
guest rooms, which feature a new South Beach theme. In addition,
significant improvements were made to the ballroom, conference meeting
space and Pavilion exhibition space, the 1,200 seat showcase performance
theater, restaurant and entertainment areas, and the facility’s
infrastructure and mechanical systems. In the Las Vegas Review Journal’s
2015 Best of Las Vegas survey, Tropicana Las Vegas garnered awards in
several categories including Best Hotel Rooms, Best Hotel Suites and
Best Hotel Room Value.
Timothy Wilmott, Chief Executive Officer of Penn National Gaming,
commented, “The planned acquisition of Tropicana Las Vegas establishes a
strong presence on the Las Vegas Strip for Penn National Gaming,
fulfilling an important long-term strategic objective for the Company.
With a $360 million acquisition cost, we believe we have structured a
prudent transaction to own and operate a premier Strip asset at an
attractive price of entry. Tropicana Las Vegas is positioned to benefit
from recent significant capital expenditures and includes 35 acres of
land on one of the busiest and most famous intersections in Las Vegas.
The property will also benefit from its proximity to the new 20,000-seat
capacity MGM - AEG Arena scheduled to open in mid-2016.
“Given our goal of leveraging Penn National’s database of nearly 3
million active regional gaming customers, we have spent the past several
years reviewing an acquisition of numerous gaming assets in Las Vegas.
The Tropicana is a quality facility that can serve as an attractive
destination offering for current Penn National customers, which further
enhances our strong competitive position in the regional gaming markets
in which we operate across the United States. At the same time, we view
this transaction as a strategic opportunity to create value for our
shareholders by adhering to our focus on operating disciplines and
careful deployment of our capital. The planned acquisition will also
further diversify our property portfolio with another wholly-owned and
operated asset.
“Penn National has developed a two-phase plan to realize the full value
of this transaction which we expect to occur over the next three to five
years. In the first phase, we intend to invest approximately $20 million
in facility improvements and integration activities. The integration
activities will include the utilization of Penn National’s nationwide
database to drive increased visitation and yield, and the upgrade of
existing technology infrastructure to integrate Tropicana’s systems with
Penn National’s existing systems with the goal of launching Penn
National’s nationwide player loyalty program, Marquee Rewards, at
Tropicana Las Vegas. In the second phase, we intend to evaluate other
potential facility enhancements at the property, such as the addition of
retail space, food and beverage outlets, casino floor improvements and
potentially additional hotel rooms. The scope, budget and timing of any
such expansion and improvements will be determined based upon Penn
National’s initial operation of the property and customer demand for
additional amenities.”
Mr. Wilmott concluded, “With our proven management team, operating
discipline and return-focused approach to capital expenditures, we
believe the Tropicana offers a meaningful opportunity for Penn National,
our regional gaming customers and our shareholders.”
The transaction and credit facility expansions are subject to regulatory
approvals, the expiration of the applicable Hart-Scott-Rodino waiting
period and other customary closing conditions and the transaction is
expected to be completed by year-end 2015.
About Penn National Gaming
Penn National Gaming owns, operates or has ownership interests in gaming
and racing facilities with a focus on slot machine entertainment. At
March 31, 2015, the Company operated twenty-six facilities in seventeen
jurisdictions, including Florida, Illinois, Indiana, Kansas, Maine,
Massachusetts, Maryland, Mississippi, Missouri, Nevada, New Jersey, New
Mexico, Ohio, Pennsylvania, Texas, West Virginia, and Ontario. At March
31, 2015, in aggregate, Penn National Gaming’s operated facilities
featured approximately 31,000 gaming machines, 760 table games and 3,100
hotel rooms.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. 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,
including future plans, strategies, performance, developments,
acquisitions, capital expenditures, and operating results. Actual
results may vary materially from expectations. These forward looking
statements are inherently subject to risks, uncertainties and
assumptions about Penn National Gaming and its subsidiaries, including
risks related to required regulatory approvals and other conditions to
closing, higher leverage, the successful integration of the acquisition,
our ability to successfully leverage our player database, market
conditions affecting the Las Vegas Strip, ongoing litigation, labor
relations , future capital expenditures, the risks associated with
construction projects (such as delays and unexpected costs) and the
availability and cost of capital and accordingly, any forward looking
statements are qualified in their entirety by reference to the factors
discussed in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2014, as well as any 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.
Source: Penn National Gaming, Inc.
Penn National Gaming, Inc.
Saul V. Reibstein, 610-373-2400
Chief
Financial Officer
or
JCIR
Joseph N. Jaffoni, Richard Land
212-835-8500
penn@jcir.com
