For Penn, breaking up not so hard to do

Wall Street is giving Penn National Gaming a fresh look after the casino operator’s $6.1 billion private equity buyout collapsed July 3.

The company, which operates 19 casinos and racetracks in regional markets, is flush with money thanks to a $225 million all-cash breakup fee and a $1.25 billion interest-free loan from its former suitors. Penn National CEO Peter Carlino told Bloomberg News that the company, which lacks a casino in Las Vegas or Atlantic City, might be shopping.

Shares of Penn National, which are traded on the Nasdaq National Market, jumped almost 4 percent after the buyout fell apart. Investors began speculating about the company’s next move. Last week, Penn National secured a 36-acre site in Maryland that could accommodate a slot machine parlor if voters approve a gaming referendum in November.

“Once the dust settles from the deal breakup, Penn’s balance sheet will be in great shape, which will give it significant flexibility to pursue strategic opportunities,” Susquehanna Financial Group gaming analyst Robert LaFleur told investors.

However, he didn’t think the company would pursue the for-sale Tropicana in Atlantic City.

“The credit markets are still seized up and doing a billion-dollar deal (plus renovations) without additional financing may not be the highest and best use of Penn’s capital,” LaFleur said.

Along the Strip, analysts speculate, Penn National could have its eye on several hotel-casinos, such as the Riviera and Tropicana. Harrah’s Entertainment’s private-equity owners could decide to sell the Rio or another casino.

“Although the current disarray in the gaming industry may eventually present opportunistic investment prospects, in the intermediate term, we do not expect much to materialize within the next six months,” LaFleur said.

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District Judge Michelle Leavitt affirmed a Clark County jury’s May 24 decision in Hong Kong businessman Richard Suen’s lawsuit against Las Vegas Sands Corp., adding more than $14.8 million in prejudgment interest, which brought the verdict to $53.6 million.

But she may not be done with the case. Las Vegas Sands attorneys have until Tuesday to file post-trial motions that will be opposed by Suen’s lawyers. A hearing will be set for a later date. The case will eventually end up in the Nevada Supreme Court.

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Veteran gaming journalist Andy Holtmann has joined Reno-based Raving Consulting as vice president of communications. Raving is operated by longtime marketing guru Dennis Conrad, who consults with casinos in the United States and international markets.

Howard Stutz’s Inside Gaming column appears Sundays. E-mail him at hstutz@reviewjournal.com or call 702-477-3871.