Table games having been approved for Charles Town Races & Slots by a 60/40 margin, stock analysts are lurving Penn National Gaming … so long as Penn’s infatuation with Fontainebleau turns out to have been a passing malady. While those West Virginia tables are probably six months away, J.P. Morgan estimates they could add as much as $20 million to Penn’s cash flow. Further down the road, casino openings at Kansas Speedway, in Toledo and maybe even in Columbus promise a series of new money spigots.
Here in Vegas, Union Gaming Group‘s Bill Lerner was feeling sufficiently bullish about Penn to pitch a takeover of Pinnacle Entertainment. As Lerner notes, Pinnacle is at a crossroads and its future direction is a big question mark. (72-year-old John Giovenco, the temporary CEO, has ruled out a long-term role and if interim Chairman Richard Goeglein takes the helm, God help Pinnacle.)
While Lerner’s proposed $15/share offer represents a huge premium to a stock that closed today at $10.37/share, it’s also a fire-sale price (5.6X EBITDA) for a company that ought to fetch at least $1.1 billion on the open market. Also, Penn doesn’t have anything in its portfolio as upscale as Pinnacle’s Lumiere Place (above), so I don’t know why anybody thinks the latter company should go for cheap. If either of this duo has “trophy assets,” it’d be Pinnacle.
Besides, there’s the small problem that Penn CEO Peter Carlino can’t be bothered with such talk. A Pinnacle bid makes hella more sense than taking on a flea-ridden mastiff like F-bleau. But it would also lumber Penn with three unfinished projects and some Boardwalk acreage in Atlantic City of which it couldn’t rid itself without taking a big write-down. (I wish it were otherwise but we all know the score.)
Assuming Penn would prevail in a bidding war for Pinnacle, it’s difficult to imagine Carlino relishing the task of finishing six or more casinos simultaneously and paying off the debt load. He’s right to stamp this idea, “Return to sender.”
A Harrah’s casino gave free liquor to a high roller to keep him playing? Nooooooooooo! Next you’re going to tell me they provide female companionship, too. Is there no end to this perfidy? If the casinos don’t protect us from our basest instincts, who will?
Seriously … booze and floozies are the traditional currency by which high-rollers are wooed, according to seasoned players, so Terrance K. Watanabe‘s accusations should hardly be serving as a wake-up call for the Nevada Gaming Control Board. Why does the NGCB seem forever to be out to lunch?
(Thanks to @Rlonjohnson for the link.)
The F-bleau bankruptcy bidding will be interesting next month with Carl Icahn and Penn National Gaming the top bidders so far. You would have to figure that Carl Icahn would get F-bleau the way things look so far and what Penn National Gaming said in the newspaper article Liz Benston wrote a couple of days ago.
Would Phil Ruffin be interested in F-bleau? He still has around $500 million dollars left or so after he bought Treasure Island last year from MGM Mirage for $750 million dollars. Maybe Ruffin will jump into the bidding and try and get F-bleau for the right price.
That photo of Lumiere Place’s lobby stopped me in my tracks. First, I saw the sign in the left background and thought it said, “Aria” and was puzzled. The decor is appealing, but it certainly doesn’t fit the CityCenter/Aria template. Then I realized it’s “Asia”. Regardless, PNK’s Lumiere Place looks first class.
I strongly doubt that Phil Ruffin would pursue F-bleau because, however little it might cost to buy the place now, it still has to be finished and Ruffin’s probably still smarting from the big writeoff that was Trump Int’l. His interest appears to be solely in properties that will be generating revenue on the day he’s handed the keys and aren’t carrying a lot of debt.
I forgot that Phil Ruffin is going in 50/50 (I think) with The Donald in Trump International. F-bleau then would probably be off the table for Phil Ruffin considering one would need at least $1 billion dollars to complete F-bleau.
That being said you posted a newspaper article a couple of weeks ago that said, “40 companies are interested in acquiring F-bleau out of bankruptcy.” That number seems very high to me. I guess we will find out next month who gets F-bleau. I say the top bid will be around $200 million dollars to buy F-bleau out of bankruptcy.
Yeah, I don’t put too much stock in that “40 companies” claim. So far we’ve only seen three and one of those is an outright joke. Methinks Icahn gets it and repositions it as a mass-market property, sucking business away from the Sahara, Riviera and the clown house.