Penn Gaming's LBO Goes Belly-Up
The gaming company's debt-backed buyout is the latest in a string of deals that proved unfeasible in a dormant economy.
July 3, 2008
Penn National Gaming’s LBO is the latest to have folded amidst prohibitive credit markets and a battered US economy, it was announced Thursday.
Fortress Investment Group and Centerbridge Partners had agreed to buy the gaming company in 2007 for $67 a share.
The company announced that the deal could not be completed without litigation, and said that revising the agreement to accept a lesser price was not feasible.
Penn is to receive, according to the terms of its statement, “$1.475 billion, which will consist of a $225 million cash termination fee and the purchase of $1.25 billion of Penn National Gaming’s redeemable preferred equity due 2015, by affiliates of Fortress, affiliates of Centerbridge, affiliates of Wachovia, and affiliates of Deutsche Bank.”
Payment to Penn will be divided into a $700 million non refundable deposit, coming today, and a $775 million payment to the escrow agent by July 18, 2008, the statement said.
“[W]e believe the substantial capital infusion will enable Penn National to be aggressively opportunistic at a time when gaming industry valuations appear very attractive,” said Penn Gaming chief executive Peter Carlino. “Our ability to structure and integrate accretive, strategic acquisitions has been an important driver of Penn National’s long-term financial growth and any such future activity would complement our current operations -- including our recently opened facilities in Pennsylvania and Maine -- and staggered pipeline of announced development projects including those in Indiana and Kansas.”
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