Mohegans to get $30 mil

The Mohegan Tribal Gaming Authority, and its subsidiary Downs Racing LP., or Downs Racing, the operator of Pocono Downs, will be receiving a $30 million refund from Penn National Gaming for the purchase of Pocono Downs.

On Aug. 7, the Authority and PNGI Pocono, Inc., a subsidiary of Penn National Gaming, Inc., or Penn National, entered into an amendment of the original purchase agreement with subsidiaries of Penn National, pursuant to which the Authority acquired the Pocono Downs entities. Pursuant to the amendment, the Authority will receive an aggregate refund of $30.0 million of the original purchase price for the Pocono Downs entities, payable in five installments of $7 million, $7 million, $6.5 million, $6 million and $3.5 million. The installments are payable upon each of the first five anniversaries of the opening date of slot machine operations at Mohegan Sun at Pocono Downs.

The Authority and Downs Racing have been aggressively pursuing various options to address the adverse economic impact on their development plans created by the Pennsylvania Department of Revenue’s unfavorable regulatory interpretation of the local share tax assessment on slot revenues and the numerous delays that have occurred in the process for issuing gaming licenses in Pennsylvania.

Also, pursuant to the amendment, the seller and the Authority agreed to modify certain provisions of the original purchase agreement, including the elimination of the Authority’s post-closing termination rights with respect to the transaction and the elimination of the seller’s indemnification obligations relating to environmental issues and certain other post-closing claims. Penn National continues to guaranty the performance of its subsidiaries under the purchase agreement, as amended.

In addition, while no official action has been taken yet, based upon discussions between counsel and counsel for various local officials, the Authority and Downs Racing also believe that Downs Racing will obtain, from available grant monies, some additional relief through the reimbursement and/or payment of infrastructure costs associated with Mohegan Sun at Pocono Downs.

Within the next week, Downs Racing plans to submit to various governmental entities, for formal consideration, an intergovernmental agreement that would provide for participating municipalities to prioritize the use of various state funds of approximately $15 million earmarked for economic development in Luzerne County for the development of Mohegan Sun at Pocono Downs. Downs Racing anticipates that various public meetings will be scheduled shortly by necessary government bodies to commence the legal process for implementing such an agreement.

Robert Soper, chief executive officer of Downs Racing, said “The local support we’ve been developing for local infrastructure grants, in conjunction with the Authority’s agreement with Penn National, has enabled us to believe that the Authority can receive an adequate return on its investment in Pennsylvania. The community and its elected leaders have indicated that they strongly support our project and they understand the economic benefit which is expected to be generated from our total investment of up to $200,000,000, including the creation of 800 to 1,000 new jobs.”

As a result of these developments, Downs Racing is pleased to announce that it has re-scheduled a two-day career fair to take place on Sept. 12 and 13. The career fair will occur at the Wachovia Arena and specific details about the event will be announced soon. Downs Racing anticipates hiring approximately 400 new positions in connection with the planned opening of a temporary slot machine facility at Mohegan Sun at Pocono Downs, and the career fair will serve as an opportunity to inform the community of the types of positions available and provide potential applicants an opportunity to show interest in joining the organization. (Mohegan Sun at Pocono Downs press release)

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