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Penn National Gaming agrees to deal with Jamul Indian Village

30 May 2018

(PRESS RELEASE) -- Penn National Gaming, Inc. announced 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 Jamul Casino – San Diego. 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 28 May. 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 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 31 March 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.
 
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