Penn National seeking $500 million through stock sale and debt offering

Penn National seeking $500 million through stock sale and debt offering

  • Howard Stutz, CDC Gaming Reports
May 11, 2020 8:00 PM
  • Howard Stutz, CDC Gaming Reports

Penn National Gaming said Monday it was seeking more than $500 million in funds through a stock sale and new debt offering.

The regional casino operator, which has 41 properties in 19 states, said in a statement $250 million would be raised through a sale of common stock and $250 million through new debt that would come due in 2026.

Both efforts have a $37.5 million over-allotment for the underwriters.

Penn said it would use the funds for “general corporate purposes.”

Penn is the latest gaming company to raise new debt from the credit markets in recent weeks, following similar moves by Wynn Resorts, MGM Resorts International, and Everi Holdings.

The markets have open to new debt offerings even as the nationwide casino industry has been shut down since mid-March in an effort to slow the spread of the COVID-19 coronavirus pandemic. However, commercial and tribal casinos in several have begun to reopen with limited operations this month with additional reopens planned going into June.

During last week’s quarterly earnings conference call, Penn National said it enough liquidity on its balance sheet – $730.7 million in cash at end of March – to survive without any revenues until the end of the year. CEO Jay Snowden said it expected to some of its regional casinos by the end of this month.

Penn had total debt of more than $2.89 billion as of March 31.

Macquarie Securities gaming analyst Chad Beynon told investors Monday that Penn National was “well-positioned” coming out of the pandemic closures to benefit from sports betting and other digital gaming opportunities through its $163 million joint venture with sports media platform Barstool Sports.

“Liquidity has been the big question for a company that owns little of its real estate,” Beynon said of Penn, which has lease operation agreements on its casinos with two real estate investment trusts.

“Initial expectations are for casinos to begin opening in the next month and with only 25%-to-30% of revenues needed versus the prior year to breakeven,” Beynon said. “We feel comfortable with the financial condition of the company.”

Shares of Penn closed at $18.66 Monday on the Nasdaq, up 23 cents or 1.25%.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at Follow @howardstutz on Twitter.