WYOMISSING, PA-As it awaits a shareholder vote on its $8.9-billion buy-out, Penn National Gaming Inc. reported record third-quarter results with a 7.4% increase in net revenue and a 9.1% rise in Ebitda. Net revenue reached $629.5 million compared with $586.1 million in the prior-year quarter, and Ebitda rose to $177.6 million versus $162.8 million in third-quarter 2006.
Because of its pending sale to a joint venture between New York City-based Fortress Investment Group LLC and Centerbridge Partners LP, the results were released without a conference call. The sale would take Penn National private and keep its current management team intact. In a statement accompanying the third-quarter results, Peter Carlino, chairman and CEO, says, “we expect to soon establish a date for the special meeting of shareholders to consider and vote on the proposal.”
Meanwhile, during the quarter ended Sept. 30, the locally based owner/operator of casinos and racetracks acquired several additional properties, and its expansion of existing assets went full steam ahead. Three expansion projects will reach completion in 2008.
Among them is the $310-million integration of the casino portion of Hollywood Casino at Penn National Race Course in Grantville, PA, which is expected to open in first quarter. In third quarter, a $21-million, 153-room hotel at Charles Town, WV is scheduled to open, and a permanent slots facility, 152-room hotel, restaurants and parking garage are scheduled to open at Hollywood Slots Hotel and Raceway in Bangor, ME, at a cost of $131 million.
During the quarter the company signed an agreement to buy Rosecroft Raceway in Fort Washington, MD; applied to be considered for a $300-million destination casino resort in Cherokee County, KS, and completed the acquisition of the Sanford-Orlando Kennel Club, a greyhound racing facility in Orlando. It also secured a right of first refusal to acquire the Sarasota Kennel Club, another Florida greyhound racetrack. Rosecroft and the two kennel clubs hold potential for expansion. “We continue to pursue opportunities to leverage our pari-mutuel management and property development skills,” Carlino says in the statement.
The Fortress/Centerbridge offer would pay $67 a share in cash for Penn National common stock, which represents a significant premium over the stock's trading range. Following release of third-quarter data on Oct. 25, PENN shares opened at $61.45 on the Nasdaq and remained relatively unchanged. The 52-week trading range is between $36.05 and $63.68 a share.
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