PNG Merger Sub Announces Receipt of the Requisite Consents and Pricing of the Tender Offers for the Notes of Penn National Gaming, Inc.

NEW YORK, May 22 /PRNewswire/ -- PNG Merger Sub Inc. (the "Purchaser"), a wholly owned subsidiary of PNG Acquisition Company Inc. ("Parent"), announced today the results to date of its previously announced cash tender offer and consent solicitation for any and all of the $200,000,000 aggregate principal amount of 6-7/8% Senior Subordinated Notes due 2011 of Penn National Gaming, Inc. ("Penn") (CUSIP No. 707569AH2) (the "2011 Notes") (such tender offer and consent solicitation together, the "2011 Notes Offer") and any and all of the $250,000,000 aggregate principal amount of 6-3/4% Senior Subordinated Notes due 2015 of Penn (CUSIP No. 707569AL3) (the "2015 Notes" and collectively with the 2011 Notes, the "Notes") (such tender offer and consent solicitation together, the "2015 Notes Offer" and collectively with the 2011 Notes Offer, the "Offers"). In addition, the Purchaser announced today the pricing terms for the 2015 Notes Offer. The Offers are being conducted in connection with the previously announced Agreement and Plan of Merger, dated as of June 15, 2007, by and among Penn, Purchaser, and Parent (the "Merger Agreement"), which provides, among other things, for Purchaser to be merged with and into Penn, as a result of which Penn would continue as the surviving corporation and would become a wholly owned subsidiary of Parent. Parent is indirectly owned by certain funds managed by affiliates of Fortress Investment Group LLC and Centerbridge Partners, L.P.

As of 5:00 p.m., New York City time, on May 22, 2008 (the "Consent Deadline"), tenders and consents had been received from holders of $199.955 million (99.98%) in aggregate principal amount of the 2011 Notes and tenders and consents had been received from holders of $249.353 million (99.74%) in aggregate principal amount of the 2015 Notes. Accordingly, the requisite consents to adopt the proposed amendments to the indentures governing the Notes have been received. Supplemental indentures (the "Supplemental Indentures") which will amend the Indenture, dated as of December 4, 2003, among Penn, the guarantors named therein and U.S. Bank National Association, as trustee and the Indenture, dated as of March 9, 2005, between Penn and Wells Fargo Bank, National Association, as trustee, relating to the 2015 Notes are to be executed by the parties to the indentures as promptly as practicable. The Supplemental Indentures will eliminate substantially all of the covenants and certain events of default and related provisions contained in the indentures. The Supplemental Indentures will become operative upon the acceptance by the Purchaser of the Notes tendered in the Offers. If the Offers are terminated or withdrawn, or the Notes are not accepted for purchase for any reason, the indentures will remain in effect in their present forms.

The total consideration for each $1,000 principal amount of 2015 Notes validly tendered and not withdrawn prior to the Consent Deadline is $1,093.73, which includes a consent payment of $20.00 per $1,000 principal amount of 2015 Notes validly tendered and not withdrawn. The total consideration was determined by reference to a fixed spread of 50 basis points over the yield, based on the bid price, of the 2.00% U.S. Treasury Note due February 28, 2010, which was calculated at 2:00 p.m., New York City time, today. The Reference Yield and the Offer Yield, as such terms are used in the Offer to Purchase for the 2015 Notes Offer, are 2.553% and 3.053%, respectively. As previously announced, the total consideration for each $1,000 principal amount of 2011 Notes validly tendered and not withdrawn prior to the Consent Deadline is $1,035.63, which includes a consent payment of $20.00 per $1,000 principal amount of 2011 Notes validly tendered and not withdrawn.

The Purchaser's obligation to accept for purchase, and to pay for, Notes validly tendered pursuant to each of the Offers is subject to the satisfaction or waiver (if permitted by the terms of the Offers) of certain conditions including: (1) the execution of the Supplemental Indentures, (2) the consummation of the merger of Purchaser with and into Penn, (3) the consummation of certain other financing transactions, and (4) certain other customary conditions.

The tender offers for the Notes are scheduled to expire at 12:00 a.m., New York City time, on June 7, 2008 (unless extended or earlier terminated by the Purchaser, the "Expiration Date"). Notes tendered in the tender offers after the Consent Deadline, but prior to the Expiration Date will not receive a consent payment. Notes tendered in the tender offers on or prior to the Consent Deadline may no longer be withdrawn.

The complete terms and conditions of the Offers are described in the Offers to Purchase, copies of which may be obtained by contacting Global Bondholder Services Corporation, the information agent for the Offers, at (212) 430-3774 (collect) or (866) 807-2200 (U.S. toll-free). Deutsche Bank Securities Inc. and Wachovia Securities are the dealer managers and solicitation agents for the Offers. Additional information concerning the Offers may be obtained by contacting Deutsche Bank Securities Inc., at (212) 250-7772 (collect) or Wachovia Securities at (704) 715-8341 (collect) or (866) 309-6316 (U.S. toll-free).

Important Notice and Forward-Looking Statements:

This press release is not an offer to purchase, a solicitation of an offer to purchase or a solicitation of consents with respect to any securities. The Offers are being made solely pursuant to the Offers to Purchase and related Letters of Transmittal.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from expectations. Penn describes certain of these risks and uncertainties in its filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2007. Meaningful factors which could cause actual results to differ from expectations described in this press release include, but are not limited to, the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; the outcome of any legal proceedings that may be instituted against Parent, Purchaser and/or Penn related to the Merger Agreement; the inability to complete the transactions contemplated by the Merger Agreement due to the failure to satisfy other conditions to completion of the merger, including the receipt of all regulatory approvals related to the merger; risks that the proposed transaction disrupts Penn's current plans and operations and the potential difficulties in key employee retention as a result of the transaction; the effects of local and national economic, credit and capital market conditions on the economy in general, and on the gaming and lodging industries in particular; construction factors, including delays, increased costs for labor and materials, Parent and Purchaser's access to available and reasonable financing on a timely basis; changes in laws, including increased tax rates, regulations or accounting standards, third-party relations and approvals, and decisions of courts, regulators and governmental bodies; litigation outcomes and judicial actions, including gaming legislative action, referenda and taxation. Furthermore, neither Parent, Purchaser, nor Penn intends to update publicly any forward-looking statements except as required by law. The cautionary advice in this paragraph is permitted by the Private Securities Litigation Reform Act of 1995.

Source: PNG Merger Sub Inc.

CONTACT: Global Bondholder Services Corp. for PNG Merger Sub Inc.,
+1-212-430-3774

2008-05-22 19:48:59 0369417 PRNEWSWIRE