Vol. 5, No. 9, September 2008
RSS Feeds
Penn National Courts Rezone
Racetrack and casino owner Penn National Gaming, awash in ready capital due to a $225 million cash breakup fee and $1.25 billion interest-free loan, continues to woo Atlantic City for the rezone of a 23-acre parcel of land on Route 30 at the city’s gateway.
As other gaming companies grapple with a poor economy and tight credit market, “Penn National has one of the strongest balance sheets in the industry,” company spokesman Eric Schippers says. “It certainly positions us well to take a hard look at existing projects and potential projects, whether they be in Kansas, Atlantic City or Maryland.”
The company just saw slightly lower second-quarter profits: $37 million, or 42 cents a share, compared to $38.3 million, or 43 cents a share in second quarter 2007. But when a planned buyout by Fortress Investment Group and Centerbridge Partners fell apart, Penn walked away with a total of $1.475 billion, including the breakup fee and a $1.25 billion equity investment by the two firms, due in 2015 or repayable by an equivalent amount of stock. Penn National is now the nation’s third largest gaming company.
Though the development site is unimpressive today—it’s an industrial highway with a storage facility and a sewage treatment plant—company officials note that Borgata, built on a former landfill, rose above its lowly origins to become the city’s best-performing gaming hall.
The company foresees a second-generation casino destination on the Route 30 site, with 100,000 square feet of casino space and about 1,500 guest rooms.
Penn National currently has 19 casinos, racetracks and riverboats in the Midwest and South, and previously offered $800 million for city-owned Bader Field, which it wants to subdivide for several massive casino projects.
