Orange Capital, LLC ("Orange Capital" or "We") holder of approximately 4.3% of
the voting stock and 5.9% economic interest in Pinnacle Entertainment Inc.
("Pinnacle")PNK, issued the following statement today regarding Gaming
and Leisure Properties, Inc. ("GLPI") offer to purchase Pinnacle's real estate
assets ("Pinnacle PropCo").
Orange Capital is encouraged by GLPI's offer to purchase Pinnacle PropCo. We
see significant merits of an acquisition by GLPI when compared to a stand
alone Pinnacle PropCo, including: increased scale, significant tenant
diversification, corporate cost synergies, and certainty of timing and ability
to close.
To date, we believe Pinnacle's board of directors has acted in the best
interests of shareholders in pursuing the Pinnacle PropCo transaction. Given
that the board chose to effect the Pinnacle PropCo transaction, we are
surprised it has failed to meaningfully engage with GLPI to date.
With respect to GLPI's current proposal, we believe today's announced offer
dramatically undervalues Pinnacle PropCo. Based on GLPI's presentation
materials, GLPI is offering to acquire Pinnacle PropCo for an approximate $4.1
billion enterprise value which represents an EV/EBITDA multiple of 11.3x using
GLPI's assumed $365 million of Pinnacle PropCo forward EBITDA.
The GLPI offer for Pinnacle PropCo comes at a significant discount to the
Triple-Net REIT peer group. Triple-Net REIT peers currently trade in a range
of approximately 14x-18x forward EBITDA, including GLPI's own trading multiple
of approximately 15x. Every multiple "turn" of EBITDA equals approximately
$5.70 of value for Pinnacle Stockholders.
Pinnacle has stated that to effect the Pinnacle PropCo REIT spin-off an equity
raise of $700 million or less is required. We urge Pinnacle to avoid any
action that could thwart an enhanced GLPI proposal, including issuance of
equity on terms which might limit GLPI's ability to consummate a transaction.
This includes the sale of Pinnacle equity to parties which may be predisposed
to an independent Pinnacle PropCo as opposed to a sale to GLPI.
Orange Capital has previously expressed that it has an interest in being part
of a solution for Pinnacle's financing needs, and we wish to reiterate our
interest to participate on terms that would be beneficial to all shareholders.
We urge Pinnacle's board to continue its pattern of shareholder friendly
actions by immediately engaging with GLPI with the goal of consummating a sale
of Pinnacle PropCo at fair market value. Ultimately we believe a sale of
Pinnacle PropCo, at the right price, is in the best interest of Pinnacle
shareholders.
About Orange Capital, Llc
Orange Capital, LLC, is an alternative asset management firm focused on
event-driven opportunities. Orange Capital was founded in 2005 by Daniel Lewis
and Russell Hoffman and is headquartered in New York.
Contact:
Bayfield Strategy, Inc.
Riyaz Lalani, 416-907-9365
rlalani@bayfieldstrategy.com
www.bayfieldstrategy.com
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