Penn National Gaming interested in acquiring assets on Las Vegas Strip

By Jennifer Lanning Drey

Portland, Ore., June 1 - Penn National Gaming, Inc. is interested in acquiring non-high end assets on the Las Vegas Strip, where the company believes a recovery will be linked to the general economy, chief financial officer William Clifford said Monday at the Goldman Sachs Lodging, Gaming, Restaurant and Leisure Conference in New York.

Clifford said the company believes the recovery in Las Vegas will occur sooner and be stronger than in areas such as Atlantic City that have also been affected by increased competition.

Penn National would only buy assets that are free cash flow positive, he said.

The company typically targets assets that provide 5% residual free cash flow after EBITDA minus interest expense, maintenance capital expenditures and income taxes. However, Penn National would lower the criteria, possibly to as low as 2%, for property on the Las Vegas Strip, he said.

The CFO also noted that the company's mentality is to pay off debt when buying an asset in order to grow free cash flow per share.

"If you can't pay off the debt, you're just running on a treadmill, and you're really not accomplishing anything," he said.

Penn National would also consider "off-strip" properties in Las Vegas, but the price would have to be extremely compelling, Clifford said.

Penn National is a Wyomissing, Pa., gaming and racing company.

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