Acquisition of Iconic Las Vegas Strip Property Scheduled to Close on August 25
WYOMISSING, Pa.–(BUSINESS WIRE)–Penn National Gaming, Inc. (PENN: Nasdaq) (“the Company,” or “Penn National”) announced that it received approval today from the Nevada Gaming Commission (“NGC”) to complete the Company’s planned $360 million acquisition of Tropicana Las Vegas. The NGC’s approval represents the final step in the regulatory process to finance and acquire the property following earlier approvals in several other jurisdictions where the Company operates. Penn National plans to complete the purchase of Tropicana Las Vegas on August 25, 2015.
“The addition of Tropicana Las Vegas to our national portfolio of gaming assets is an exciting and important milestone for Penn National as it fulfills our longstanding strategic objective to acquire the right resort at the right price on the Las Vegas Strip. Tropicana Las Vegas will allow us to leverage our database of nearly 3 million active regional gaming customers while further diversifying our operations with another wholly-owned asset,” said Timothy Wilmott, Chief Executive Officer of Penn National Gaming. “Our regional gaming customers have long asked us to offer them an attractive destination on the Las Vegas Strip. After our disciplined search, we believe the iconic Tropicana Las Vegas will successfully address customer demand for a Strip property while enhancing our already strong competitive position in the local markets where we operate. Furthermore, the Tropicana Las Vegas is ideally suited to benefit from significant investment at adjacent gaming properties which is expected to generate additional traffic in the area.”
Tropicana Las Vegas is situated on a 35-acre land parcel at the corner of Tropicana Boulevard and Las Vegas Boulevard, approximately 2.5 miles from McCarran International Airport at the southern end of the Las Vegas Strip. The property has undergone over $200 million of upgrades over the past four years, including renovations of all its nearly 1,500 guest rooms. Other amenities include a 50,000 square foot casino with over 1,000 gaming positions, a sports book, three full service restaurants, a food court, a 1,200-seat performance theater, the 300 seat Laugh Factory comedy club, over 100,000 square feet of exhibition and meeting space, and a five-acre tropical beach event area and spa.
As previously announced, Penn National has developed a two-phase plan to realize the full value of the transaction, which it expects to implement over the next three to five years. In the first phase, scheduled to occur over the next 6-9 months, the Company will invest approximately $20 million in further facility improvements and integration activities. These will include upgrading the property’s existing technology infrastructure to allow for the integration of Penn National’s nationwide player loyalty program, Marquee Rewards, at Tropicana Las Vegas, with the goal of launching the program in the second quarter of 2016. In the second phase, the Company plans to evaluate other potential facility enhancements at the property, such as the addition of retail space, food and beverage outlets, casino floor improvements and potentially additional hotel rooms. The scope, budget and timing of any such expansion and improvements will be determined based upon Penn National’s operation of the property and customer demand for additional amenities.
In June, Penn National named Bob Sheldon to the newly created role of President of Las Vegas Operations, subject to customary regulatory approvals. In this role, Mr. Sheldon has direct oversight of all aspects of the operations of both Tropicana Las Vegas and M Resort Spa Casino in Henderson, NV and is responsible for building a strong local leadership team that will implement the Company’s operating, guest service and growth strategies at Tropicana. Reporting to Mr. Sheldon at Tropicana will be General Manager Philippe Khouri, who most recently served as General Manager of the Company’s Argosy Alton property. Mr. Khouri will assume his role effective immediately.
Mr. Wilmott concluded, “We believe the addition of Tropicana Las Vegas to our regional gaming property portfolio will enable us to drive significant long-term shareholder value. We look forward to closing on the acquisition next week and, as our capital spending programs are implemented, welcoming our guests from across the country to the Las Vegas Strip.”
About Penn National Gaming
Penn National Gaming owns, operates or has ownership interests in gaming and racing facilities with a focus on slot machine entertainment. At June 30, 2015, the Company operated twenty-six facilities in seventeen jurisdictions, including Florida, Illinois, Indiana, Kansas, Maine, Massachusetts, Maryland, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania, Texas, West Virginia, and Ontario. At June 30, 2015, in aggregate, Penn National Gaming’s operated facilities featured approximately 32,000 gaming machines, 760 table games and 3,100 hotel rooms.
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,” “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, including future plans, strategies, performance, developments, acquisitions, capital expenditures, and operating results. Actual results may vary materially from expectations. These forward looking statements are inherently subject to risks, uncertainties and assumptions about Penn National Gaming and its subsidiaries, including risks related to the occurrence and the timing of the closing, the closing of related financing and higher leverage, the successful integration of the acquisition, our ability to successfully leverage our player database, market conditions affecting the Las Vegas Strip and regional gaming, costs relating to ongoing litigation in which Tropicana Las Vegas is involved, labor relations, the impact of future capital expenditures, the risks associated with construction projects (such as delays and unexpected costs) and the availability and cost of capital and accordingly, any forward looking statements are qualified in their entirety by reference to the factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, as well as any subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, each as filed with the United States 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.
Penn National Gaming, Inc.
Saul V. Reibstein, 610-373-2400
Chief Financial Officer
Joseph N. Jaffoni / Richard Land, 212-835-8500