LAS VEGAS—In an effort to maximize long-term shareholder value,the board of directors of Pinnacle EntertainmentInc. has green-lighted the firm's plan to split itsoperating and real estate assets into two publicly tradedcompanies. According to a Bloomberg report, the decisionwas driven in part by pressure from Orange CapitalLLC, an activist investor in PNK.

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To facilitate the separation, Pinnacle will create a newlyformed, publicly traded REIT that will be distributed to PNKstockholders in a tax-free spin-off. PNK, meanwhile will remain asthe operating entity. Pinnacle owns and operates 15 gamingentertainment properties in Colorado, Indiana, Iowa, Louisiana,Mississippi, Missouri, Nevada and Ohio. It also holds a majorityinterest in the racing license owner, as well as a managementcontract, for Retama Park Racetrack outside of San Antonio, TX.

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While a “significant” amount work remains to be done to completethe spinoff, the move will provide a lower weighted average cost ofcapital and an attractive financial platform to take advantage offuture opportunities in both the casino gaming industry and thebroader leisure and entertainment sector, relates Pinnacle CEOAnthony M. Sanfilippo.

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“We are focused on pursuing this plan and expect littledisruption to result from the REIT separation on our day to dayoperations, for our guests and for our team members,” he added. “Aswe work to execute the REIT transaction, we will remain focused oncompleting the Ameristar integration and fully leveraging thefinancial and scale benefits of that transaction, while alsomaintaining our focus on operational excellence to maximize ourfinancial performance.”

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According to the terms of the plan, the property company willinitially own the real estate assets of PNK, while they will beleased back to the operating company to be used by its subsidiariesunder a triple-net master lease agreement, the terms of which arestill being hammered out. Meanwhile, the property company will lookto grow through property acquisitions, namely in the gaming,leisure and entertainment industries.

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The spinoff is still subject to a variety of factors, includingapproval from the IRS, appointment of senior executive leadershipfor the property company, gaming regulatory approvals, firming upthe maser lease agreement and financing. The spin-off is slated forcompletion in 2016.

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In conjunction with the spin-off, Pinnacle will seek to obtain$1 billion in equity financing to reduce its balance sheet leverageand for general corporate purposes, which would be subject to aseparate SEC filing process.

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Sule Aygoren

Aygoren oversees the editorial direction and content for ALM’s Real Estate Media Group, including Real Estate Forum and GlobeSt.com. In her tenure with ALM, she’s held roles of increasing responsibility, including Managing Editor. Aygoren has received several awards for her coverage including Best Trade Magazine Report from the National Association of Real Estate Editors and the James D. Carper Award for Young Journalists. Under her direction, Forum has received four national NAREE awards for Best Commercial Real Estate Trade Magazine.