WYOMISSING, Penn.--(BUSINESS WIRE)--Penn National Gaming, Inc. (PENN: Nasdaq) announced today that it has entered into a series of agreements with an affiliate of the Jamul Indian Village of California and the JIV’s senior lender, which will complete Penn National’s separation from Hollywood Casino Jamul – San Diego (“JIV Casino”). In March 2018, Penn National disclosed plans for an orderly transition of the management of the JIV Casino to JIV, and the Company’s involvement in JIV Casino ended on May 28. These new agreements terminate substantially all of the Company’s remaining obligations and liabilities in connection with this project.
In October 2016, the Tribe obtained long term secured financing for the JIV Casino, consisting of revolving and term loan credit facilities (the “Credit Facilities”) totaling approximately $460 million. The term loan C facility is held by the Company’s subsidiary, San Diego Gaming Ventures, LLC. The borrower is currently in default on its obligations under the loan and the Company’s loan is fully subordinated to the other lenders that have extended credit to the Tribe. At present, approximately $95 million is outstanding on the term loan C facility, and the Company recorded charges of $89.8 million related to the loan and related loan commitments in 2017. The net carrying value of the term loan C and related obligations totaled $20.6 million at March 31, 2018.
As a result of the agreements, Penn National will receive a total of approximately $15 million in cash proceeds for the sale of the loan and the payment of outstanding licensing fees and the Company will be relieved of its approximately $29 million current funding obligation. The Company anticipates offsetting the capital loss associated with the sale of the loan against the capital gains related to asset sales that are part of the Company’s pending acquisition of Pinnacle Entertainment, Inc., which should result in a net tax benefit of approximately $20 million.
About Penn National Gaming
Penn National Gaming owns, operates or has ownership interests in gaming and racing facilities and video gaming terminal operations with a focus on slot machine entertainment. At March 31, 2018, the Company operated twenty-nine facilities in seventeen jurisdictions, including California, Florida, Illinois, Indiana, Kansas, Maine, Massachusetts, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania, Texas, West Virginia, and Ontario, Canada. At March 31, 2018, in aggregate, Penn National Gaming operated approximately 36,100 gaming machines, 810 table games and 4,800 hotel rooms. The Company also offers social online gaming through its Penn Interactive Ventures division.
