PNG Merger cancels tender offer for Penn National's 6 7/8%, 6¾% notes

By Angela McDaniels

Tacoma, Wash., July 3 - PNG Merger Sub Inc. said it cancelled its tender offer and consent solicitation for Penn National Gaming, Inc.'s $200 million 6 7/8% senior subordinated notes due 2011 and $250 million 6¾% senior subordinated notes due 2015.

All tendered notes will be returned, and the proposed amendments to eliminate substantially all of the restrictive covenants and some events of default in the note indentures will not become effective, according to a PNG news release.

The consent deadline was May 22, and the tender offer was set to expire on July 7.

The tender offer was being held in connection with the planned acquisition of Penn National by PNG Acquisition Co., Inc., which is the parent company of PNG Merger Sub and is indirectly owned by Fortress Investment Group LLC and Centerbridge Partners, LP.

Penn National agreed to terminate the merger agreement on Thursday. The company's board determined that the likelihood of completing the merger was highly unlikely due to remaining regulatory approvals, credit facility conditions and probable litigation, according to a Penn National news release.

As of June 27, PNG Merger Sub had received tenders for $199.96 million, or 99.98%, of the 6 7/8% notes and for $249.61 million, or 99.84%, of the 6¾% notes.

For each $1,000 principal amount of notes, the company had planned to pay $1,035.63 for the 6 7/8% notes and $1,093.73 for the 6¾% notes plus accrued interest.

The payouts included a $20.00 consent payment for each $1,000 principal amount of notes tendered by the consent deadline.

Global Bondholder Services Corp. (866 807-2200 or collect 212 430-3774) was the information agent. Deutsche Bank Securities Inc. (collect 212 250-7772) and Wachovia Securities (866 309-6316 or collect 704 715-8341) were the dealer managers and solicitation agents.

Penn National, located in Wyomissing, Pa., owns and operates casino and horse racing facilities.

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