PENN PENN Entertainment Inc

Completion of Tropicana Las Vegas Real Estate Transactions

As previously disclosed, on March 27, 2020, Penn National Gaming, Inc., a Pennsylvania corporation (“Penn National” or the “Company”), entered into a binding term sheet (the “Term Sheet”) with Gaming and Leisure Properties, Inc., a Pennsylvania corporation (“GLPI”). The majority of the real estate assets used in the Company’s operations are subject to triple net master leases with GLPI.

On April 16, 2020, pursuant to the Term Sheet, the Company and certain of its subsidiaries entered into a Purchase Agreement (the “Tropicana Purchase Agreement”) with GLPI and certain of its subsidiaries pursuant to which GLPI and its subsidiaries acquired the real property associated with the Company’s Tropicana Las Vegas Casino Hotel Resort (the “Tropicana Property”) from the Company and its subsidiaries for rent credits of $307.5 million, which may be utilized to pay rent under the parties’ existing leases beginning in May 2020. Pursuant to the Tropicana Purchase Agreement, GLPI will conduct a sale process with respect to the Tropicana Property and the casino and hotel business operated on the Tropicana Property (the “Tropicana Business”) for up to 24 months (the “Sale Period”), with Penn National receiving (i) 75% of the proceeds above $307.5 million plus certain taxes, expenses and costs if an agreement for such sale is executed in the first 12 months of the Sale Period or (ii) 50% of the proceeds above $307.5 million plus certain taxes, expenses and costs if an agreement for such sale is executed in the remainder of the Sale Period, in each case, subject to the terms and conditions set forth in the Tropicana Purchase Agreement.

On April 16, 2020, a subsidiary of the Company entered into a lease (the “Tropicana Lease”) with a subsidiary of GLPI, pursuant to which such Company subsidiary will lease the Tropicana Property for nominal rent and continue to operate the Tropicana Business for two years (subject to three one-year extensions at GLPI’s option) or until the Tropicana Property and the Tropicana Business are sold, whichever is earlier.

The descriptions of the Tropicana Purchase Agreement and the Tropicana Lease set forth under this Item 1.01 are qualified in their entirety by reference to the Tropicana Purchase Agreement and the Tropicana Lease, copies of which are attached hereto as Exhibits 2.1 and 2.2, respectively, and incorporated herein by reference.

Credit Agreement Amendment

On April 14, 2020 (the “Amendment Effective Date”), Penn National entered into that certain Second Amendment (the “Amendment Agreement”), by and among the Company, the guarantors party thereto, the lenders party thereto and Bank of America, N.A., as letter of credit lender, swingline lender, administrative agent and collateral agent, amending that certain Amended and Restated Credit Agreement, dated as of January 19, 2017 (as amended, amended and restated, supplemented or otherwise modified from time to time prior to the Amendment Effective Date, the “Existing Credit Agreement”, and as amended pursuant to the Amendment Agreement, the “Amended Credit Agreement”), governing its senior secured revolving credit facility (the “Revolving Credit Facility”), senior secured term loan A facility (the “Term Loan A Facility”) and senior secured term loan B facility (collectively, the “Credit Facilities”).

The Amendment Agreement amends the Existing Credit Agreement to provide for certain modifications (the “Amendments”) to the Existing Credit Agreement. During the period (the “Covenant Relief Period”) beginning on the Amendment Effective Date and ending on the earlier of (x) the date that is two business days after the date on which the Company delivers to the administrative agent a covenant relief period termination notice and (y) the date on which the administrative agent receives a compliance certificate with respect to the fiscal quarter ending March 31, 2021, the Company will not have to comply with any maximum leverage ratio or minimum interest coverage ratio. Instead, during the Covenant Relief Period, the Company will be subject to a minimum liquidity covenant. In addition, the Amendments, among other things, (i) amend the financial covenants that are applicable after the Covenant Relief Period (ii) provide that, during the Covenant Relief Period, loans under the Revolving Credit Facility and the Term Loan A Facility shall bear interest at either (a) a base rate or (b) an adjusted LIBOR rate, in each case, plus an applicable margin, in the case of base rate loans, of 2.00%, and in the case of adjusted LIBOR rate loans, of 3.00%, (iii) provide that, during the Covenant Relief Period, the Company shall pay a commitment fee on the unused portion of the commitments under the Revolving Credit Facility at a rate of 0.50% per annum, (iv) provide for a 0.75% LIBOR floor applicable to all LIBOR loans under the Credit Facilities, (v) carve out COVID-19 related effects from certain terms of the Credit Facilities during the Covenant Relief Period and (vi) make certain other changes to the covenants and other provisions of the Existing Credit Agreement.

The description of the Amendment Agreement set forth under this Item 1.01 is qualified in its entirety by reference to the Amendment Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

The information set forth under the heading “Credit Agreement Amendment” in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.