Penn National Buys M Resort Debt For $230.5 Million

Penn National Gaming Inc. (PENN) said it has bought the debt backed by the M Resort, an off-the-strip resort and casino near Las Vegas, for $230.5 million.

The casino operator has been expanding its operations using its strong cash flow. It has performed relatively well even though reduced consumer spending has brought prolonged suffering to the sector, Moody's Investors Service said Monday.

Penn National early this year weighed the possibility of taking control of the Fontainebleau Las Vegas, a stalled casino hotel development on the Las Vegas Strip.

The company said Friday it purchased the bank debt on the entity that owns the property, as well as $160 million of subordinated debt, from Bank of Scotland PLC, a unit of Lloyds Banking Group PLC (LYG, LLOY.LN). The subordinated debt was formerly held by MGM Resorts International (MGM).

The resort, on the south side of the city, opened last year just as visitation to the area was slumping. It features 390 rooms and more than 92,000 square feet of gambling space. The property represents Penn National's first major investment in the Las Vegas area.

Penn National shares closed Thursday at $30.86 and were inactive premarket. The stock has gained 14% this year.

-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; [e-mail]