Penn National open to more stock buybacks, to continue acquiring, CFO says

By Kenneth Lim

Boston, April 2 - Penn National Gaming, Inc. plans to pursue further stock buybacks if the price is right, and the company will continue to be an aggressive acquirer, chief financial officer William Clifford said Thursday at the Telsey Advisory Group Consumer Conference in New York.

The Wyomissing, Pa.-based gaming company has been buying back stock over the past year. Shareholders approved a $200 million common stock buyback program in July 2008. The company bought back $31.7 million of its stock at $27.52 apiece in the third quarter of 2008 and $120.9 million of stock at $15.51 apiece in the fourth quarter.

Penn National common stock (Nasdaq: PENN) closed at $27.57 on Thursday.

If the common stock falls back to a "compelling" range, "it wouldn't be very difficult for us to get our board together to authorize another buyback," Clifford said.

Debt maturing

The company currently has about $2.43 billion of debt and about $596.3 million of excess cash.

The maturity on a $1.6 billion term loan due June 4, 2011 that bears interest at Libor plus 175 basis points can be pushed out by five quarters if the company calls $200 million of 6.875% subordinated debt due Dec. 1, 2011 in the second quarter of 2011, Clifford said.

Still acquiring

The company, which has averaged about one major acquisition per year in the past few years, will continue to seek acquisition opportunities, Clifford said.

There are many opportunities now that the gaming industry has been hit by the poor economy, but finding a good deal is not easy, Clifford said.

Penn National has strict criteria when it comes to acquisitions, not just in terms of pricing but also in terms of the company's ability to add something through the deal, he explained.

"When we're evaluating the EBITDA, we do a lot of soul searching...when we acquire it, will we do better or as well as the previous owners?" he said.

Asked about speculation that Penn National could be interested in something on the Las Vegas Strip, Clifford said the company had no deals yet.

"You've got companies that are in trouble, but that doesn't mean they want to sell assets, and it doesn't mean they want to sell it cheap, which they don't," he said.

The company's recent bids to develop casinos in Kansas are also not indications that Penn National is drifting away from acquiring, he added.

"We are working our tails off trying to figure out how to get one of these things done," Clifford said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.