Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National” or
the “Company”) today announced that it has priced its underwritten
public offering of 16,666,667 shares of its common stock, $0.01 par
value per share, at a public offering price of $18.00 per share
(the “Common Stock Offering”) and its underwritten public offering
of $300 million aggregate principal amount of 2.75% Convertible
Senior Notes due 2026 (the "Convertible Notes" and such offering,
the "Convertible Notes Offering"). The size of the Common Stock
Offering was increased from the previously announced $250 million
of common stock of the Company, and the aggregate principal amount
of the Convertible Notes Offering was increased from the previously
announced $250 million. The gross proceeds to the Company from the
Common Stock Offering and the Convertible Notes Offering, before
deducting underwriting discounts and other offering expenses, are
expected to be approximately $600 million (or approximately $690
million if the underwriters in the offerings fully exercise their
options to purchase additional shares of common stock and
Convertible Notes as described below).
In addition, the Company has granted the underwriters a 30-day
option to purchase up to 2,500,000 of additional shares of its
common stock at the public offering price less the underwriting
discount in the Common Stock Offering (reflecting an increase from
the previously announced option of up to $37.5 million additional
shares of common stock) and a 30-day option to purchase up to $45
million aggregate principal amount of additional Convertible Notes,
solely to cover over-allotments, in the Convertible Notes Offering
(reflecting an increase from the previously announced option of up
to $37.5 million aggregate principal amount of additional
Convertible Notes).
The Convertible Notes will be convertible by holders if certain
conditions are met, and during certain periods, based on an initial
conversion rate of 42.7350 shares of common stock per $1,000
principal amount of the Convertible Notes, which is equivalent to a
conversion price of approximately $23.40 per share, representing a
premium of 30.0% above the offering price per share in the Common
Stock Offering. The Company will settle conversions of the
Convertible Notes in cash, shares of common stock, or a combination
thereof at the Company's election. The Company expects to use the
net proceeds from the Common Stock Offering and the Convertible
Notes Offering for general corporate purposes that will
significantly enhance our liquidity while providing the company
with the flexibility to invest in our long term growth initiatives.
Subject to the satisfaction of customary conditions, the offerings
are expected to close on May 14, 2020. Neither of the closings of
the Common Stock Offering or the Convertible Notes Offering is
conditioned upon the closing of the other offering.
Goldman Sachs & Co. LLC and BofA Securities are acting as
joint book-running managers and representatives of the
underwriters, and J.P. Morgan, Fifth Third Securities and Wells
Fargo Securities are also serving as book-running managers for the
Common Stock Offering and the Convertible Notes Offering. Barclays,
BTIG, Citizens Capital Markets, Macquarie Capital, Morgan Stanley,
Stifel, SunTrust Robinson Humphrey and TD Securities are acting as
co-managers for the Common Stock Offering. Barclays, Citizens
Capital Markets, Macquarie Capital, Morgan Stanley, Stifel,
SunTrust Robinson Humphrey, TD Securities and US Bancorp are acting
as co-managers for the Convertible Notes Offering. A shelf
registration statement relating to these securities has been filed
with the U.S. Securities and Exchange Commission (“SEC”) and has
become effective. Each of the Common Stock Offering and the
Convertible Notes Offering may be made only by means of a
prospectus supplement and an accompanying base prospectus. The
preliminary prospectus supplements and accompanying base prospectus
relating to each of the Common Stock Offering and the Convertible
Notes Offering will be filed with the SEC and will be available on
the SEC's website at www.sec.gov. Copies of the preliminary
prospectus supplements and accompanying base prospectus relating to
the Common Stock Offering and the Convertible Notes Offering may be
obtained from Goldman Sachs & Co. LLC, 200 West Street, New
York, New York 10282, Attention: Prospectus Department, by
telephone at (866) 471-2526, or by email at
prospectus-ny@ny.email.gs.com or BofA Securities, NC1-004-03-43,
200 North College Street, 3rd floor, Charlotte NC 28255-0001,
Attention: Prospectus Department, or via email:
dg.prospectus_requests@bofa.com.
This press release does not constitute an offer to sell, or the
solicitation of an offer to buy, any share of common stock, any
Convertible Notes or any other security and shall not constitute
any offer, solicitation or sale in any jurisdiction in which such
offer, solicitation, purchase or sale is unlawful. Before
investing, please read the applicable prospectus supplement and
accompanying base prospectus and other documents Penn National has
filed with the SEC for more complete information about Penn
National.
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, Michigan, 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 launched iCasino 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
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,” “goal,” “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. Such statements are
all subject to risks, uncertainties and changes in circumstances
that could significantly affect the Company’s future financial
results and business. Accordingly, the Company 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, risks related to the following:
(a) market conditions for the Company’s common stock and corporate
debt generally, for the securities of gaming, hospitality and
entertainment companies; (b) the anticipated terms of the proposed
Common Stock Offering and Convertible Notes Offering; (c) the
timing and ability of the Company to consummate the Common Stock
Offering and Convertible Notes Offering; (d) the anticipated use of
proceeds and difficulties, delays or unexpected costs in offering
the Common Stock Offering and Convertible Notes Offering; (e) the
magnitude and duration of the impact of the COVID-19 pandemic on
capital markets, general economic conditions, unemployment,
consumer spending and the Company’s liquidity, financial condition,
supply chain, operations and personnel; (f) industry, market,
economic, political, regulatory and health conditions; (g)
disruptions in operations from data protection breaches,
cyberattacks, extreme weather conditions, medical epidemics or
pandemics such as COVID-19, and other natural or manmade disasters
or catastrophic events; (h) the reopening of the Company’s gaming
properties are subject to various conditions, including numerous
regulatory approvals and potential delays and operational
restrictions; (i) our ability to access additional capital on
favorable terms or at all; (j) our ability to remain in compliance
with the financial covenants of our debt obligations; (k) the
consummation of the proposed Morgantown and Perryville 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; (l) actions to reduce costs and improve efficiencies
to mitigate losses as a result of the COVID-19 pandemic could
negatively impact guest loyalty and our ability to attract and
retain employees; (m) the outcome of any legal proceedings that may
be instituted against the Company or its directors, officers or
employees; (n) the impact of new or changes in current laws,
regulations, rules or other industry standards; (o) the ability of
our operating teams to drive revenue and margins; (p) the impact of
significant competition from other gaming and entertainment
operations; (q) our ability to obtain timely regulatory approvals
required to own, develop and/or operate our properties, or other
delays, approvals or impediments to completing our planned
acquisitions or projects, construction factors, including delays,
and increased costs; (r) the passage of state, federal or local
legislation (including referenda) that would expand, restrict,
further tax, prevent or negatively impact operations in or adjacent
to the jurisdictions in which we do or seek to do business (such as
a smoking ban at any of our properties or the award of additional
gaming licenses proximate to our properties, as recently occurred
with Illinois and Pennsylvania legislation); (s) the effects of
local and national economic, credit, capital market, housing, and
energy conditions on the economy in general and on the gaming and
lodging industries in particular; (t) the activities of our
competitors (commercial and tribal) and the rapid emergence of new
competitors (traditional, internet, social, sweepstakes based and
VGTs in bars and truck stops); (u) increases in the effective rate
of taxation for any of our operations or at the corporate level;
(v) our ability to identify attractive acquisition and development
opportunities (especially in new business lines) and to agree to
terms with, and maintain good relationships with
partners/municipalities for such transactions; (w) the costs and
risks involved in the pursuit of such opportunities and our ability
to complete the acquisition or development of, and achieve the
expected returns from, such opportunities; (x) our expectations for
the continued availability and cost of capital; (y) the impact of
weather, including flooding, hurricanes and tornadoes; (z) changes
in accounting standards; (aa) the risk of failing to maintain the
integrity of our information technology infrastructure and
safeguard our business, employee and customer data (particularly as
our iGaming division grows); (bb) with respect to our iGaming and
sports betting endeavors, the impact of significant competition
from other companies for online sports betting, iGaming and
sportsbooks, our ability to achieve the expected financial returns
related to our investment in Barstool Sports, our ability to obtain
timely regulatory approvals required to own, develop and/or operate
sportsbooks may be delayed and there may be impediments and
increased costs to launching the online betting, iGaming and
sportsbooks, including delays, and increased costs, intellectual
property and legal and regulatory challenges, as well as our
ability to successfully develop innovative products that attract
and retain a significant number of players in order to grow our
revenues and earnings, our ability to establish key partnerships,
our ability to generate meaningful returns and the risks inherent
in any new business; (cc) with respect to our proposed Pennsylvania
Category 4 casinos in York and Berks counties, risks relating to
construction, and our ability to achieve our expected budgets,
timelines and investment returns, including the ultimate location
of other gaming properties in the Commonwealth of Pennsylvania; and
(dd) other factors included in “Risk Factors” of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2019,
the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2020, subsequent Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K, each as filed with the U.S. 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200512005469/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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