Reaches Agreement with Gaming & Leisure
Properties for $337.5 Million in Rent Credits
Raises $1.2 Million for Emergency Relief Fund
and Extends Health Benefits to Assist Team Members Affected by
Planned Companywide Furloughs
Withdraws Full-Year 2020 Guidance
Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National” or
the “Company”) today announced additional measures to help mitigate
the financial impact of the ongoing COVID-19 pandemic.
“As the global COVID-19 health crisis continues to evolve, we
are navigating through this unprecedented time for our Company, our
industry and our nation,” said Jay Snowden, President and Chief
Executive Officer of Penn National. “With all of our 41 properties
in 19 states temporarily shuttered, like many others in the gaming
and hospitality sector, we are making difficult decisions to help
preserve our liquidity and ensure a brighter future for our
Company’s team members, customers, shareholders and other key
stakeholders.
“Today we announced an agreement with our principal landlord,
Gaming & Leisure Properties (GLPI: Nasdaq) (“GLPI”), involving
the sale of the Tropicana Las Vegas real estate assets (we will
continue to operate the facility) and a new ground lease for our
planned Category 4 casino in Morgantown, Pennsylvania, in exchange
for $337.5 million in rent credits,” said Mr. Snowden. “In
addition, the deal includes an option for us to acquire the
operations of GLPI’s Hollywood Casino in Perryville, Maryland at a
future date. We greatly appreciate the cooperation, creativity and
partnership shown by GLPI during this challenging time. While this
transaction will help to relieve liquidity pressure in terms of
rent obligations, we are committed to taking further steps to
reduce our ongoing operating expenses in order to ensure we have a
healthy business to return to when we are able to re-open our
doors,” said Mr. Snowden.
As previously announced, Penn National will continue to pay its
team members their full wages and benefits through March 31.
However, several states have announced extensions of their
temporary closure orders and other states may soon follow suit.
Given the uncertainty about the duration of the pandemic, and with
no meaningful revenue for the foreseeable future, Penn National
will be implementing unpaid furloughs impacting approximately
26,000 team members companywide beginning April 1.
“This decision was extremely difficult to make for all of us at
Penn,” Mr. Snowden wrote in a letter to Company team members. “Penn
National is a family, and we deeply regret the hardship this will
place on you and your loved ones. We are extremely motivated and
focused on re-opening our properties as soon as it is safe and
legal to do so. To try to help ease some of the burden, we’re
maintaining your medical benefits through June 30, for those team
members who are currently enrolled in our health plans,” wrote Mr.
Snowden.
In addition, Penn National has established a special COVID-19
Emergency Relief Fund under the Penn National Gaming Foundation to
provide assistance to team members and local relief organizations
in our communities. The Company has already raised over $1.2
million in team member relief funds, including more than $425,000
in personal contributions from Mr. Snowden and his senior
management team, the Company’s Board of Directors, and property
general managers. For more information about the COVID-19 Emergency
Relief Fund or to make a donation, please visit:
https://www.pngaming.com/community.
“We are committed to doing all we can to help our affected team
members get through this,” said Mr. Snowden. “I am proud of the
fact that when the call came down from our governors across the
country to temporarily close our facilities, we managed the process
in a safe and orderly fashion, ensuring the health and well-being
of our team members and guests. I’m equally proud of the fact that
since closing our doors over a week ago, our properties have
donated more than 45 tons of food to local food banks and homeless
shelters in our communities, ensuring our perishable food items can
help those in need. In addition, our properties have donated
thousands of unused masks and surgical gloves to first responders
and health care providers,” said Mr. Snowden.
Penn National is taking the following additional short-term
actions to reduce its cost structure during the property
closures:
- Meaningful pay cuts for the CEO and remaining property and
corporate leadership teams effective April 1 until such time as the
Company determines that its properties have substantially returned
to normal operations;
- The Board of Directors have elected to forgo any of their cash
compensation effective April 1 until such time as the Company
determines that its properties have substantially returned to
normal operations;
- The majority of Corporate team members will also be furloughed,
and the Company will be operating with a minimum, mission critical
staffing of less than 850 team members companywide during the
closures.
“Since the time we suspended operations, we have taken swift
measures to confront this unprecedented challenge head on and have
managed to significantly reduce our daily operating expenses,” said
Mr. Snowden. “While the steps we’ve taken are deeply painful on a
personal and professional level, I am confident these moves will
help to preserve our Company’s and our team members’ long-term
future,” concluded Mr. Snowden.
In light of the COVID-19 outbreak and ongoing uncertainty
regarding its magnitude and duration, Penn National is withdrawing
its 2020 financial guidance provided on February 6, 2020.
The Company will provide a financial and operational update in
connection with its first quarter 2020 earnings announcement
planned for May 7.
About Penn National Gaming
Penn National Gaming owns, operates or has ownership interests
in 41 gaming and racing properties in 19 jurisdictions and video
gaming terminal operations with a focus on slot machine
entertainment. We also offer live sports betting at our properties
in Indiana, Iowa, Mississippi, Pennsylvania and West Virginia. In
total, Penn National’s properties feature approximately 50,000
gaming machines, 1,300 table games and 8,800 hotel rooms. In
addition, the Company operates an interactive gaming division
through its subsidiary, Penn Interactive Ventures, LLC, which
recently launched iGaming in Pennsylvania and, through strategic
partnerships, operates online sports betting in Indiana,
Pennsylvania and West Virginia. The Company also has a leading
customer loyalty program, mychoice, with over five million active
customers.
Forward-looking Statements
All statements included in this press release, other than
historical information or statements of historical fact, are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements, including statements regarding COVID-19, the length of
time Penn National’s gaming facilities will be required to remain
closed and the impact of these closures on Penn National and its
stakeholders, the demand for gaming once the facilities reopen, the
impact of COVID-19 on general economic conditions, capital markets,
unemployment and the Company’s liquidity, operations, supply chain
and personnel, the potential benefits of the transactions with GLPI
and the decisions made by the Company in response to COVID-19, the
Company’s daily cash burn and the ability of the parties’ to obtain
third party approvals are all subject to risks, uncertainties and
changes in circumstances that could significantly affect the
Company’s future financial results and business. Accordingly, Penn
National cautions that the forward-looking statements contained
herein are qualified by important factors that could cause actual
results to differ materially from those reflected by such
statements. Such factors include, but are not limited to: (a)
COVID-19 and its effect on capital markets, general economic
conditions, unemployment and the Company’s liquidity, operations
and personnel; (b) industry, market, economic, political,
regulatory and health conditions; (c) disruptions in operations
from data protection breaches, cyberattacks, extreme weather
conditions, medical epidemics or pandemics such as the COVID-19,
and other natural or manmade disasters or catastrophic events; (d)
the consummation of the proposed transactions with GLPI are subject
to various conditions, including third party agreements and
approvals, and accordingly may be delayed or may not occur at all,
including for reasons beyond our control; (e) potential adverse
reactions or changes to business or regulatory relationships
resulting from the announcement or completion of the transactions
with GLPI; (f) the outcome of any legal proceedings that may be
instituted against the Company or its directors, officers or
employees; (g) the impact of new or changes in current laws,
regulations, rules or other industry standards; and (h) other
risks, including those as may be detailed from time to time in the
Company’s filings with the Securities and Exchange Commission
(“SEC”). For more information on the potential factors that could
affect the Company’s financial results and business, review the
Company’s filings with the SEC, including, but not limited to, its
Annual Report on Form 10-K and its Current Reports on Form 8-K. 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/20200327005526/en/
General Media Inquiries: Eric Schippers, Sr. Vice
President, Public Affairs Penn National Gaming 610/373-2400
Financial Media and Analyst Inquiries: Justin Sebastiano,
Sr. Vice President of Finance and Treasurer Penn National Gaming
610/373-2400
Joseph N. Jaffoni, Richard Land JCIR 212/835-8500 or
penn@jcir.com
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