Shares of U.S. casino company Penn National (NASDAQ:PENN) jumped as much as 12.7% in trading today after closing a new round of financing. Near the end of the trading day, shares were up about 9% from the previous day's close.
Penn National today closed on the sale of $300 million in common stock and $300 million of 2.75% convertible senior notes due in 2026. The bond offering was increased from a previously announced $250 million because demand was strong.
After the funding, Penn National has $1.3 billion in cash and equivalents on the balance sheet and that could increase to $1.4 billion if underwriters exercise their option to acquire $90 million in additional stock and bonds.
The casino industry is trying to shore up balance sheets around the world and this is a great example of that. What's encouraging for Penn National and the industry overall is that rates are still relatively low for convertible notes, lowering the cash outlay needed to pay interest. It'll still be months before we learn what kind of recovery the casino industry is going to have, but right now funding is flowing freely and that will give casino companies a lease on life for now.