Penn National tenders for Argosy's $200 million 9% notes, $350 million 7% notes

By Jennifer Chiou

New York, July 21 - Penn National Gaming, Inc. said its wholly owned subsidiary Thoroughbred Acquisition Corp. started cash tender offers for any and all of Argosy Gaming Co.'s $200 million of 9% senior subordinated notes due 2011 and $350 million 7% senior subordinated notes due 2014.

The company is also soliciting noteholder consents for amendments and waivers to the notes' indentures.

The tender offers and consent solicitation is being carried out as part of Penn National's pending acquisition of Argosy.

The two tender offers expire at midnight ET on Aug.17, unless extended while the consent deadline is 5 p.m. ET on Aug. 3, unless extended.

The acquisition, which is expected to close in August, is conditioned upon gaming approvals in Illinois, Louisiana and Missouri as well as the approval of the Federal Trade Commission.

Conditions for the offers include receiving consents from a majority of noteholders, the completion of the acquisition and Thoroughbred receiving the proceeds of the financing on terms satisfactory to Penn.

For each $1,000 principal amount in notes, Thoroughbred will pay a total based on the notes' redemption price on their first call date plus interest payments up to the call date, discounted using the bid-side yield on a reference Treasury plus 50 basis points. From that total, accrued interest up to buy excluding the payment date is subtracted. The total amount includes a $10.00 per $1,000 consent payment.

For the 9% notes, the call price is $1,045 per $1,000 principal amount and the reference Treasury is the 2.375% note due Aug. 31, 2006.

For the 7% notes, the call price is $1,035 per $1,000 principal amount and the reference Treasury is the 3.25% note due Jan. 15, 2009.

Those who tender their holdings after the consent deadline will not receive the $10 per $1,000 principal amount consent payment.

A valid tender is considered a consent.

Thoroughbred intends to finance the offers with part of the proceeds from Penn National's planned new $2.725 billion of senior secured credit facilities.

Deutsche Bank Securities Inc. (800 553-2826) is dealer manager and solicitation agent and Mackenzie Partners, Inc. (800 322-2885) is information agent.

Wyomissing, Pa.-based Penn National Gaming owns and operates casino and horse racing facilities.

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