Thu 11/18/2021 15:21 PM
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Relevant Items:
Penn National Gaming Covenants Tear Sheet, Debt Documents Summaries
Penn National Gaming Debt Documents

Penn National Gaming owns and manages gaming and racing properties and video gaming terminal operations and owns, manages or has ownership interests in 43 gaming and racing properties in 20 states.

The company has a secured $700 million revolver (currently undrawn), an approximately $597 million term loan A and an approximately $983 million term loan B-1, each under the same credit agreement. In addition, the company has two series of unsecured notes: $400 million of outstanding 5.625% senior notes due 2027 and $400 million of 4.125% senior notes due 2029.

On April 14, 2020, the company amended its credit facilities to waive the financial covenants during a “covenant relief period.” As previously reported, during this time the company was subject to a minimum liquidity covenant and was severely limited in its ability to access its debt, restricted payment, investment and prepayment baskets. The covenant relief period ended on May 7, 2021, with the delivery of the company’s March 31, 2021, financial statements, and the company is again required to comply with its financial covenants and is able to fully access capacity under its negative covenant baskets.

The company’s capital structure as of Sept. 30 is as follows:

Covenant Conclusions


  • Liquidity and financial covenants - Liquidity as of Sept. 30 was approximately $3.403 billion, comprising availability under the company’s revolver and unrestricted cash and equivalents.As of Sept. 30, the credit agreement includes a 2.50x interest coverage ratio covenant, a 5.50x net leverage ratio covenant (which decreases in future periods) and a 3.75x secured net leverage ratio covenant (which decreases in future periods). As of Sept. 30, the company’s interest coverage ratio was 3.4x. As of Sept. 30, the company’s net leverage ratio, calculated in accordance with the credit agreement, which caps cash netting at the greater of $300 million and $15 million multiplied by the number of gambling sites the company owns and operates (43 such sites as of Sept. 30, permitting cash netting of $645 million), was 1.18x, and the secured net leverage ratio, calculated in the same manner, was 0.5x.

  • Debt and liens - As of Sept. 30, the company may incur an additional $3.52 billion of first lien debt and $591 million of structurally senior debt, each under the credit agreement, which is more restrictive for the incurrence of those types of debt. The company’s ability to incur junior lien or unsecured debt is uncapped under the credit agreement so long as such debt matures after the maturity date of the loans.

  • Dividends, asset transfers and prepayments - The company currently has significant flexibility to pay dividends, make asset transfers or prepay other debt. Because the company is able to meet the leverage ratio tests included in the leverage-based restricted payments, investments and prepayments baskets under the credit agreement and the leverage-based restricted payments and investments baskets under the secured notes, its capacity under those negative covenants is currently uncapped up to the relevant leverage tests.

--Jeff Brenner
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