Yesterday Penn National Gaming reported its third quarter results and said that during the third quarter it had modified its capital structure to increase financial flexibility and further strengthen liquidity to move forward with pending and potential new growth opportunities. The Company presently operates nineteen facilities in fifteen jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. In aggregate, Penn National Gaming’s operated facilities feature over 26,300 gaming machines, approximately 400 table games, over 2,000 hotel rooms and over 959,000 square feet of gaming floor space.

Peter M. Carlino, Chairman and CEO of Penn said, “While there is only so much we can do to address the impact of macro-economic conditions on regional gaming results, we are very focused on the future. Penn National is working aggressively to deploy its strong balance sheet and facility development skills to generate long-term shareholder value through the prudent management of our property base and capital structure, developing new growth opportunities and exercising appropriate risk management disciplines.”

The company reported revenue of US$620.4 million. Carlino commented, “The challenging economic environment, which has resulted in lower consumer spending at gaming facilities, continued to impact operating results for both the overall industry and Penn National in the third quarter, particularly during the month of August. Penn National’s reported third quarter results were below guidance as, in addition to the challenging economy, we incurred charges for several items that were excluded from the guidance provided at the time we reported second quarter results, including lobbying costs and an $800,000 charge for design and development costs related to the proposed addition of a hotel -- which has since been cancelled -- which impacted results at Black Gold Casino at Zia Park.”

On the matter of Fontainebleau Las Vegas Carlino said, “We have expended significant effort with outside legal, construction and financial consultants to analyze the potential opportunity for the bankrupt Fontainebleau project in Las Vegas. We recognize that the issues in Las Vegas are extremely challenging, and are focused on attempting to develop a creative and strategic solution that would include bringing in an equity partner. While we have received numerous inquiries from potential investors, we are primarily interested in partnering with entities that can bring strategic value in addition to economic contributions.

“We are currently in discussions with a partner that we believe meets this criteria, and have advanced a proposal to the debtors and several key creditor constituencies to provide a ‘debtor in possession’ loan and serve as the stalking horse in an auction of the project. Because the numerous creditors have not unanimously endorsed our proposal, it is uncertain whether our proposal will be accepted or whether we will be the successful bidder at an auction. We will provide additional disclosure on this matter if and when definitive agreements are in place.” (E-10.22.09)

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