Penn National maintains interest in Strip property
Penn National Gaming officials spent a small portion of the company's fourth-quarter earnings conference call Thursday giving analysts a tour of the Strip.
But the regional casino and racetrack operator wasn't willing to tip its hand on where it might land.
The Wyomissing, Pa.-based company, which made a short-lived, lowball bid for the bankrupt Fontainebleau project last year, still is interested in operating a Strip hotel-casino.
"We'll continue to look for the right opportunities in Las Vegas," Penn National Chairman and Chief Executive Officer Peter Carlino said. "We're fully engaged on that effort. But it's got to be the right thing to do."
He said the company "made the right call" on Fontainebleau, which was sold last month in a bankruptcy court auction to billionaire corporate raider Carl Icahn for $150 million.
In November, Penn National made a bid of $50 million for the shuttered Fontainebleau, which once had a construction budget of nearly $3 billion. Icahn outbid Penn with a counter offer and the company dropped out of the transaction.
He said it will cost $1.5 billion to finish the Fontainebleau, which was 70 percent complete when construction was halted in April.
"Nobody did what we did with the team of people in analyzing the cost of the project," Carlino said. "If the stars had aligned, it still would have taken a tremendous amount of work. As it was, Mr. Icahn wanted it and he should have it. So good luck to him."
Analysts asked about other Strip possibilities, such as buying the financially troubled Riviera or managing the foreclosed-upon Cosmopolitan from Deutsche Bank, which is completing the project.
Carlino called the Riviera "a tear-down project" that didn't interest the company.
As for the Cosmopolitan, Carlino was somewhat evasive.
"We have a very valuable database of folks who make frequent trips to Las Vegas," Carlino said. "We're looking for the right opportunity and we'll leave it at that."
Even without a Las Vegas opportunity, Penn National is heavily involved in gaming expansion across the United States.
In the last quarter, the company was selected by the Kansas Lottery Commission to develop a casino near Kansas City and was awarded the right to build a slot machine-only casino in Maryland. Penn National also is moving forward on two casinos in Ohio and adding table games to its West Virginia and Pennsylvania casinos.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
PENN POSTS $3555 MILLION LOSS
Penn National Gaming Thursday said it lost $355.4 million, or $4.54 per share, in the fourth quarter ended Dec. 31. That compared with a loss of $378.6 million, or $4.77 per share, in the same quarter a year ago.
The loss was driven by a $520.5 million impairment charge the company booked on the noncash value of its Lawrenceburg, Ind., casino, which could be negatively affected when the company's Ohio casinos open.
Companywide net revenue dropped 2.7 percent to $555.8 million from $571.1 million, with declines in gaming, food and beverage revenue.
"We have limited control over how consumers are continuing to respond to economic pressures and as a result, the gaming industry experienced revenue compression again in the fourth quarter," Carlino said in a statement.
Analysts were not deterred by the company's net loss, which was blamed on the challenging economy.
"At some point, we believe the regional operators will have to see a material improvement in top-line trends, but with uncertainty around unemployment and an economic recovery, we do not anticipate an imminent improvement in consumer spending," Macquarie Securities gaming analyst Joel Simkins told investors.
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