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October 11, 2010
Share ThisPenn National Gaming Inc. (PENN) announced that it bought all of The M Resort LLC bank debt including $160 million of subordinated debt formerly held by MGM Resorts International (MGM) from Bank of Scotland plc, a unit of Lloyds Banking Group. The total transaction was for $230.5 million.
The M Resort, opened in March 2009, is an upscale casino resort located ten miles from the gaming hub of the U.S. Las Vegas Strip. M Resort envisages developing up to a one million square feet retail and multi-screen digital movie entertainment complex. Penn National believes economic uncertainty and a huge debt burden were a haul on M Resort’s operation. However, the company remains optimistic over the long-term growth potential of M Resort and expects its operating results to improve irrespective of a turnaround in the local Las Vegas economy. Las Vegas rebounded from the deep depression in August with Las Vegas Strip gambling revenues rising 21.1% year over year to $544.3 million.
Wachtell, Lipton, Rosen & Katz acted as legal advisor, and Miller Buckfire & Co., LLC, acted as financial advisor to the Penn National-M Resort transaction.
Going forward, we believe Penn National’s foray into the Las Vegas market will pay off owing to its favorable climate and low tax structure. Additionally, Penn National's huge customer base of 12 million, including those who visit Las Vegas frequently, will positively affect M Resort and the local economy.
Penn National owns, operates or has ownership interests in gaming and racing facilities. The company currently operates twenty three facilities and is on an expansion mode with a series of casinos slated to open by 2012. Penn National recently agreed to establish a joint venture to own and operate casinos in Texas.
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