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Penn is a diversified, multi-jurisdictional owner and operator of gaming properties, as well as horse racetracks and associated off-track wagering facilities. Penn owns or operates 19 gaming properties located in Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Canada (Ontario).
The complaint alleges that Penn violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Specifically, the complaint alleges that Penn issued false and materially misleading statements that misrepresented and failed to disclose one or more material facts.
On or about June 15, 2007, Penn agreed to a merger agreement buyout from funds affiliated with Fortress Investment Group and Centerbridge Partners, L.P. at $67.00 per share. Penn publicly announced via national press releases that it had entered into a definitive agreement by PNG Acquisition Company, Inc., an entity indirectly owned by certain funds managed by affiliates of Fortress Investment Group and Centerbridge Partners, L.P. Furthermore, Penn represented said merger was targeted for completion by June 15, 2008, after which the take-out would begin to increase by a fractional amount daily.
Under the terms of the merger agreement, Penn announced, if the merger was completed by June 15, 2008, Penn's shareholders would be entitled to receive $67.00 in cash, without interest, for each share of Penn common stock they own.
If the merger was not completed by June 15, 2008, the proposed merger agreement filed with the SEC indicated that the $67.00 per share merger consideration would be increased by $0.0149 per day until it closes, approximately 8 percent per year. Under the proposed merger agreement, the financing for the transaction was announced to be in place where Deutsche Bank and Wachovia Bank supplied the debt financing to Fortress Investment Group and Centerbridge Partners, L.P., the acquiring firms. There was to be no changes or modifications to the financing commitments unless agreed to by Penn or if debt financing was available under better terms. Upon Penn's merger and target date announcement and aforesaid representations, Penn's stock, which had been trading in the mid to low $50s, jumped to over $63 per share.
In April, May, and June of 2008, through press releases and other communications, Penn issued various announcements related to the planned merger -- all of them relating to approval of the proposed merger by various state regulatory agencies having jurisdiction over gaming where Penn had gaming properties.
The Complaint further alleges that throughout the first half of 2008, Penn never informed the public that the proposed merger was in jeopardy or that it was negotiating with the purchaser and the banks. Instead, in a June 6, 2008 press release, Penn announced that the end date of the merger agreement was being extended to October 2008, in order to secure the approval of the remaining states. Upon information and belief, without any disclosure to the public, Penn was negotiating complicated bilateral agreements for months with the banks, acquiring firms, attorneys and management committees to cancel the proposed merger agreement and negotiating the payment of a termination fee and loans from the banks.
On July 3, 2008, Penn announced that its planned $5.82 billion takeover by Fortress Investment Group and Centerbridge Partners, L.P. had been terminated. Penn also announced that as a result of the termination, it would be receiving $1.475 billion, which would consist of a $225 million cash termination fee and the purchase of $1.25 billion of Penn's redeemable preferred equity due in 2015.
Upon information and belief, sometime in the Spring of 2008, the family members and other associated with insiders began selling Penn's stock. Such sales rapidly escalated the two weeks before the July 3, 2008 announcement. Consequently, the price of Penn's stock began to deteriorate. In April, May, and June of 2008, Penn was publicly announcing status of approval by the various states in order to fraudulently bolster its stock price by instilling shareholders of the belief that a merger was still going to take place.
If you are a member of the Class described above, you may wish to join the class action. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel by September 22, 2008.
Braude & Margulies, P.C. 1200 Potomac St., NW Washington, DC 20007 (202) 471-5400 Email Contact
SOURCE: Braude & Margulies, P.C.
http://www2.marketwire.com/mw/emailprcntct?id=0BA6A4CB86CEE6E5
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