GlobeSt.com UPDATE: Penn National Offers to Sell Two Illinois Argosy Casinos

WYOMISSING, PA-Penn National Gaming’s $2.2-billion acquisition of Argosy Gaming Co. has yet to win the approval of the Illinois Gaming Board, which is the only remaining authorization needed to allow the transaction to go forward. In exchange for IGB’s approval, Penn National proposed to sell Argosy’s two casinos in the state within 18 to 24 months of its Argosy acquisition. The properties are Alton Belle Casino in Alton, IL and Empress Casino Joliet in Joliet, IL.

The IGB indicated that if the assets were divested, the board would like sale agreements to be reached between Penn Gaming and the proposed buyer or buyers within 12 months of completion of the acquisition. At the same time, however, Aaron Jaffe, chairman of IGB, told Penn National he was optimistic that the acquisition could be approved at the board’s Sept. 29 meeting. If the approval is secured on that date, Penn National expects to close on the sale on Oct. 3.

Penn National made the offer, a company spokesman tells GlobeSt.com, “to overcome any concerns the board might have about concentrations of casino ownership in Illinois, even though the IGB has never publicly expressed such concerns.” Penn National operates Hollywood Casino in Aurora, IL.

Divestiture of the Argosy Illinois properties would take the total number of properties Penn National will sell from the Argosy portfolio to three. The Federal Trade Commission hinged its approval of the Argosy acquisition on the sale of Argosy’s Baton Rouge, LA facility to Fort Mitchell, KY-based Columbia Sussex Corp. for $150 million. Columbia Sussex has paid a 10% deposit on this pending acquisition. The Penn National spokesman says no buyers have yet been identified for the Illinois properties. All 12 of the other jurisdictions in which both Penn National and Argosy operate have authorized the sale transaction.

In awaiting IGB’s decision, Penn National has extended the expiration date of cash tender offers for outstanding principal amounts of Argosy notes aggregating $550 million from July 21, 2005 to midnight Sept. 30. An aggregate principal amount of $533.6 million in Argosy notes have been validly tendered to date and not withdrawn.