It took nearly a year for the deal to acquire Penn National Gaming Inc. (PENN) for $6.1 billion or $67 a share to fall through but speculators had killed the buyout months before.
That’s why the shares traded in the $40 range for a number of weeks before tanking this past month to the $30 level.
And when word leaked that Fortress Investment Group and Centerbridge Partners had backed out, the price of Penn shares fell even further.
But, there was some recovery on Thursday, the final day of trading before the Fourth of July holiday, after analysts were able to read the terms of the deal. Most striking was the notice that Penn National would receive a $225 million termination fee immediately.
Also, the investment affiliates of Fortress, Centerbridge and the banks that had agreed to provide the buyout financing – Wachovia and Deutsche Bank – would provide another $1.25 billion to buy redeemable preferred stock that will mature in June 2015.
That puts plenty of fresh cash in Penn Gaming’s pocket.
Penn National Chairman and CEO Peter Carlino announced an immediate buyback of $200 million worth of company stock and suggested that with all this cash the company could reduce its debt and place itself in a position to acquire other strategic properties.