Penn National Gaming Inc. (PENN) shocked the investment community last week with the announcement that it planned to spin off part of its holdings into a Real Estate Investment Trust (REIT) in order to maximize its value for shareholders.
Investors responded quickly by pushing the company’s shares up by nearly $12 per share to just under $50 per share.
The plan calls for the establishment of two separate companies. One will continue to operate the gambling facilities and pay annual rent of some $450 million to the second company, called PropCo, which would then distribute nearly all of its revenues to the shareholders in the form of a dividend.
Prior to completing the spinoff, according to Chairman and CEO Peter Carlino, the company will refinance its existing debt.
Ray Poirier is the longtime executive editor at GamingToday.
Contact Ray at [email protected].