LAS VEGAS Penn National Gaming Inc. has purchased all of the debt on the 390-key M Resort, effectively giving it control over the 19-month-old property south of the Las Vegas Strip.
M Resort was built and financed by Anthony Marnell III, son of the developer of the nearby Rio All-Suite Hotel & Casino, for about US$1 billion. The M Resort LLC has been unable to make payments on its US$860 million in outstanding debt since last year, and Penn acquired the debt from Bank of Scotland PLC for US$230.5 million—a 75% discount.
M Resort will continue to operate during the closing process, which includes regulatory approval from the Nevada Gaming Commission. It is unclear what role CEO Marnell will have with the resort once the transaction is completed, although he says he is open to staying on board if Penn will have him.
The acquisition is a milestone for Wyomissing, Pennsylvania-based Penn, which has long sought an entrée into America’s gaming capital. Penn owns, operates or has ownership interests in 23 facilities in Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia and Ontario. The company operates approximately 2,000 hotel guestrooms.
“This transaction represents a great opportunity for Penn National, M Resort, its customers and employees as we address the financial uncertainty and debt burden which has created an overhang on M Resort’s operations,” says Penn CEO Peter Carlino. “The M Resort is a beautiful, fresh, upscale locals- and destination-oriented casino resort which provides an excellent customer experience.”
M Resort is located 10 miles from the Las Vegas Strip, with access to Interstate 15 and in close proximity to several master-planned communities. Situated on 90 acres on the southeast corner of Las Vegas Boulevard and St. Rose Parkway, the resort features 92,000 sq. ft. of gaming space, nine restaurants, five destination bars, more than 60,000 sq. ft. of meeting and conference space and a 100,000-sq.-ft. events piazza. M Resort’s master plan includes the potential to develop up to 1 million sq. ft. of retail space and a multi-screen digital movie entertainment complex.
“M Resort is a unique, differentiated property that we expect will continue to improve its operating results even without the benefit of a rebound in the local Las Vegas economy,” Carlino says. “Longer-term, the core attributes which contributed to the growth of Las Vegas into one of the world’s preeminent entertainment destinations including its favorable climate and low taxes, combined with Penn National’s growing database of 12 million regional gaming customers, many of whom already visit Las Vegas, will further benefit M Resort and the local economy.”
Wachtell, Lipton, Rosen & Katz acted as legal advisor, and Miller Buckfire & Co. LLC acted as financial advisor, to Penn in connection with the transaction.