Penn National: ‘Making difficult decisions to ensure a brighter future’

Penn National Gaming has announced that it will be implementing additional measures in an attempt to help mitigate the financial impact that has been caused by the ongoing outbreak of COVID-19

As was previously announced, Penn National is set to continue to pay its team members their full wages and benefits until 31 March. With this being said, several states have now announced extensions to its temporary closure orders with other states expected to follow suit. 

As a result of this, the uncertainty surrounding the duration of the pandemic, as well as the lack of ‘meaningful revenue’ that is set to be earned by the organization, Penn National will be implementing unpaid furloughs impacting approximately 26,000 team members companywide beginning April 1.

Jay Snowden, President and Chief Executive Officer of Penn National, stated: “As the global COVID-19 health crisis continues to evolve, we are navigating through this unprecedented time for our Company, our industry and our nation.

“With all of our 41 properties in 19 states temporarily shuttered, like many others in the gaming and hospitality sector, we are making difficult decisions to help preserve our liquidity and ensure a brighter future for our Company’s team members, customers, shareholders and other key stakeholders.

“This decision was extremely difficult to make for all of us at Penn. Penn National is a family, and we deeply regret the hardship this will place on you and your loved ones. 

“We are extremely motivated and focused on re-opening our properties as soon as it is safe and legal to do so. To try to help ease some of the burden, we’re maintaining your medical benefits through June 30, for those team members who are currently enrolled in our health plans.”

In addition to this, Penn National unveiled the establishment of a COVID-19 Emergency Relief Fund that is set to provide assistance to team members and local relief organizations in its communities. 

As it stands, the company has raised over $1.2m in team member relief funds, including over $425,000 in personal contributions from Snowden and his senior management team, the Company’s Board of Directors, and property general managers.

Snowden continued: “We are committed to doing all we can to help our affected team members get through this. I am proud of the fact that when the call came down from our governors across the country to temporarily close our facilities, we managed the process in a safe and orderly fashion, ensuring the health and well-being of our team members and guests. 

“I’m equally proud of the fact that since closing our doors over a week ago, our properties have donated more than 45 tons of food to local food banks and homeless shelters in our communities, ensuring our perishable food items can help those in need. In addition, our properties have donated thousands of unused masks and surgical gloves to first responders and health care providers.”

Penn National has also announced an agreement with Gaming & Leisure Properties (GLPI), its principal landlord, for the sale of the Tropicana Las Vegas real estate assets, which Penn will continue to operate. This includes a new ground lease for its planned Category 4 casino in Morgantown, Pennsylvania, in exchange for $337.5 million in rent credits.  

Discussing the deal with GLPI, Snowden concluded: “In addition, the deal includes an option for us to acquire the operations of GLPI’s Hollywood Casino in Perryville, Maryland at a future date. 

“We greatly appreciate the cooperation, creativity and partnership shown by GLPI during this challenging time. While this transaction will help to relieve liquidity pressure in terms of rent obligations, we are committed to taking further steps to reduce our ongoing operating expenses in order to ensure we have a healthy business to return to when we are able to re-open our doors.”

To conclude, Penn National is taking the following additional short-term actions to reduce its cost structure during the property closures:

  • Meaningful pay cuts for the CEO and remaining property and corporate leadership teams effective April 1 until such time as the Company determines that its properties have substantially returned to normal operations.

 

  • The Board of Directors have elected to forgo any of their cash compensation effective April 1 until such time as the Company determines that its properties have substantially returned to normal operations.

 

  • The majority of Corporate team members will also be furloughed, and the Company will be operating with a minimum, mission critical staffing of less than 850 team members companywide during the closures.