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Rapidly growing multi-jurisdictional operator of
regional gaming properties |
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Niche “slot focused” operator in strong regional
drive-to markets |
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Growing and well-diversified cash flow |
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Aggressive acquisition, operations, and
expansion strategies employing management disciplines emphasizing long-term
growth, ROI and shareholder value |
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Exploiting jurisdictional growth opportunities |
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Named to Fortune’s list of 100 Fastest-Growing
Companies for four consecutive years |
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Creating long-term shareholder value - highly
ranked in the Wall Street Journal’s annual Shareholder Scorecard for share
price appreciation: |
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#8 among all ranked companies for one year
performance |
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#24 among all ranked companies for three year
performance |
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#5 among all ranked companies for five year
performance |
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#7 among all ranked companies for ten year
performance |
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#1 in the casino industry for one year
performance |
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Targeted expansion criteria |
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Lower-penetrated, higher-growth markets |
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Limited competition jurisdictions |
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Five compelling investment opportunities over
the next two years |
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Three at Penn and two at Argosy |
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Penn National Race Course |
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Bangor Historic Track |
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Charles Town Races and Slots |
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Argosy Casino - Riverside |
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Argosy Casino - Lawrenceburg |
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Transaction value of $2.2 billion |
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$47.00 per share in cash |
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16.4% premium to closing price of $40.38
(11/02/04) |
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30% premium to average closing price over the
last 90 days |
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Aggregate $1.4 billion in total equity
consideration |
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Repay $805 million of Argosy’s outstanding
indebtedness |
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TTM transaction EBITDA multiple of 8.5x |
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Fully committed financing |
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Expected closing: 2H ’05 |
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Expected to be immediately accretive to EPS upon
closing |
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Will create the nation’s third largest casino
operator |
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In excess of $2 billion in pro forma annual
revenues |
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In excess of $550 million in LTM EBITDA
(includes $20 million in corporate synergies) |
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Significant near-term growth prospects at both
entities |
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Expansion into three new jurisdictions –
Indiana, Missouri, Iowa |
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Complimentary geographic asset base |
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Further diversifies cash flows |
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Combined company will be broadly diversified by
property and region |
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No single property will account for more than
20% of revenue |
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No single property will account for more than
25% of EBIDTA |
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Consistent with Penn National’s successful
long-term growth strategy |
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Regional properties operationally similar to
PENN’s existing portfolio |
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Manage business by key metrics and strict return
criteria |
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Market share |
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Operating margins |
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20% ROI within 12 - 18 mos. on internal cap-ex
projects |
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Rapidly integrate acquired properties |
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Standardize accounting and financial reporting |
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Evaluate local management and make appointments
as required |
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Integrate HR/benefits plans and other Corporate
purchasing plans |
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Reward exceptional performance based on |
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EBITDA contribution |
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Long-term customer satisfaction |
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Long-term employee satisfaction |
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Maine |
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Bangor Downs |
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PENN acquired Bangor Historic Track, Inc. |
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Bangor track is the only facility in the state
eligible to operate slots |
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Bangor track permitted to operate up to 1,500
slots |
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Effective tax rate is estimated to be 50% |
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Currently undergoing licensing process |
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Budget for the project is approximately $125
million, inclusive of a $51 million purchase price |
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Slots in Pennsylvania |
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Will develop Penn National Race Course facility
into an integrated gaming/racing facility |
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Plan to open permanent facility with 2,000 slots
approximately one year after a license is granted and expand up to 5,000
games based on demand |
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841,000 adults within a one hour drive |
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Budget of $240 million inclusive of $50 million
gaming license fee and purchase of 2,000 slot machines |
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Penn National Race Course facility projected to
generate approximately $160 million in gaming revenue with 25% operating
margin in first full year of operation |
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Anticipate $310 million in annual gaming revenue
at property’s maturity/full build out |
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Completed sale of Pocono facility for $280M,
providing $170M of net proceeds |
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Notes