Acquisitions & Hotel Openings

Penn National Gaming Purchases M Resort Debt

October 11, 2010 - Penn National Gaming, Inc. (Nasdaq: PENN) announced today that it has purchased all of The M Resort LLC bank debt, plus $160 million of subordinated debt formerly held by MGM Resorts International, which represents all of the outstanding debt of M Resort, from Bank of Scotland plc, a unit of Lloyds Banking Group, for $230.5 million.

Peter M. Carlino, Chief Executive Officer of Penn National commented, "This transaction represents a great opportunity for Penn National, M Resort, its customers and employees as we address the financial uncertainty and debt burden which has created an overhang on M Resort's operations. The M Resort is a beautiful, fresh, upscale locals and destination-oriented casino resort which provides an excellent customer experience. M Resort is located ten miles from the Las Vegas Strip with access to I-15 and in close proximity to several master-planned communities.

"M Resort is a unique, differentiated property that we expect will continue to improve its operating results even without the benefit of a rebound in the local Las Vegas economy. Longer-term, the core attributes which contributed to the growth of Las Vegas into one of the world's pre-eminent entertainment destinations including its favorable climate and low taxes, combined with Penn National's growing database of 12 million regional gaming customers, many of whom already visit Las Vegas, will further benefit M Resort and the local economy."

Opened in March 2009, the M Resort Spa Casino is situated on over 90 acres on the southeast corner of Las Vegas Boulevard and St. Rose Parkway. The resort features over 92,000 square feet of gaming space including 1,900 slot machines, 64 table games, 14 poker tables and a race and sports book. M Resort also offers 390 guest rooms and suites, nine restaurants and five destination bars, more than 60,000 square feet of meeting and conference space, a 4,700 space parking facility, a state-of-the-art spa and fitness center and a 100,000 square foot events piazza. M Resort's master plan includes the potential to develop up to one million square feet of retail and a multi-screen digital movie entertainment complex.

Wachtell, Lipton, Rosen & Katz acted as legal advisor, and Miller Buckfire & Co., LLC acted as financial advisor, to Penn National Gaming in connection with the transaction. Katten Muchin Rosenman LLP acted as legal advisor, and The Blackstone Group acted as financial advisor, to Bank of Scotland plc in connection with the transaction.

About Penn National Gaming
Penn National Gaming owns, operates or has ownership interests in gaming and racing facilities with a focus on slot machine entertainment. The Company presently operates twenty-three facilities in sixteen jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. In aggregate, Penn National's operated facilities feature over 27,500 gaming machines, over 500 table games, over 2,000 hotel rooms and over one million square feet of gaming floor space.

Penn National Gaming recently opened Maryland's first casino and added table games to its facilities in West Virginia and Pennsylvania. Through a joint venture, Penn National is developing a full casino at Kansas Speedway in Kansas City, which is anticipated to open in the first half of 2012, and is also developing casinos in Toledo and Columbus, Ohio, with openings targeted for 2012. The Company recently agreed to establish a joint venture (subject to final approval by the Texas Racing Commission and the satisfaction of certain other closing conditions) to own and operate pari-mutuel operations in Texas, including the Sam Houston Race Park in Houston, Texas, the Valley Race Park in Harlingen, Texas and a planned racetrack in Laredo, Texas.

Coming Up In The August Online Hotel Business Review


Feature Focus
Food and Beverage: Investing to Keep Pace
After five harrowing years of recession and uncertain recovery, revenues in the hotel industry (including food and beverage) have finally surpassed the previous peak year of 2007. Profits are once again on the rise and are expected to advance for the foreseeable future. The consequence of this situation means that hotel operators now have the funds to invest in their food and beverage operations in order to keep pace with rapidly changing industry trends and the evolving tastes of their hotel guests. One of the most prominent recent trends is the “Locavore Movement” which relies heavily on local sources to supply products to the hotel restaurant. In addition to fresh produce, meats and herbs, some operators are engaging local craft breweries, distilleries, bakers, coffee roasters and more to enhance their food and beverage options, and to give their operation a local identity. This effort is designed to increasingly attract local patrons, as well as traveling hotel guests. Some hotels are also introducing menus that cater to both the calorie and the ingredient conscious. Gluten-free, low-cal and low-carb menu items prepared with fresh, seasonal ingredients are available to more fitness-minded guests. Another trend is placing greater emphasis on “comfort” and “street” foods which are being offered in more casual settings. The idea is to allow chefs to create their own versions of these classic recipes, with the understanding that the general public seems to be eschewing more formal dining options. Finally, because the hotel lobby is becoming the social epicenter of its operation – a space which both guests and locals can enjoy – more diverse and expanded food and beverage options are available there. The August issue of the Hotel Business Review will report on all the recent trends and challenges in the food and beverage sector, and document what some leading hotels are doing to augment this area of their business.