Penn National Gaming’s Trials and Tribulations

Tom Paine

David Williams probably never expected what would follow when he signed on with Penn National Gaming (Nasdaq: PENN) as CFO in January, to begin work March 3. The 20 year Apple employee, last as CFO of its Claris (formerly FileMaker) subsidiary, was probably looking forward to potentially booming times at the Berks County-based company, and the biggest problem managing growth. The gaming industry has been jumping with opportunities.

Then Covid-19 hit the US and eventually led to shutdowns of most social gatherings spots, including on-premise gaming operations.

Suddenly Penn National was facing a liquidity crisis. Earlier in March it drew down the remainder its $700 million revolving credit facility. The company has temporarily closed 34 properties across the country. It also announced that it has suspended the construction of $110 million Hollywood Casino Morgantown and the $120 million Hollywood Casino York in Pennsylvania .

And it reached an agreement Friday to sell the real estate assets of the Tropicana Las Vegas for $337.5 million in rent credits, while maintaining operating rights. “While this transaction will help to relieve liquidity pressure in terms of rent obligations, we are committed to taking further steps to reduce our ongoing operating expenses in order to ensure we have a healthy business to return to when we are able to re-open our doors,”  said Penn National President & CEO Jay Snowden in a statement.

On Friday Penn National also announced unpaid furloughs for approximately 26,000 employees companywide beginning April 1. 

Busy month for Mr. Williams. And Apple isn’t needy for cash.