Lawsuit Over PNGI Buyout Deal Dismissed

Lawsuit dismissed seeking damages over the failed buyout of Penn National Gaming Inc.

A lawsuit filed seeking damages over the failed buyout of Penn National Gaming Inc. has been dismissed by a Maryland federal judge.

U.S. District Judge Peter J. Messitte signed the dismissal order Feb. 24, one day after oral arguments were heard on a dismissal motion filed by PNGI, according to court records and online docket information. Messitte granted the motion of dismissal with prejudice, meaning the plaintiffs cannot re-file the lawsuit.

Styled as a class-action securities fraud lawsuit, the legal action was filed in July 2008 by PNGI shareholder Herman M. Braude, who is an attorney based in Washington, D.C. At least three other shareholders eventually joined the lawsuit, which claimed PNGI failed to notify investors the failed $8.9 billion buyout offer by Fortress Investment Group LLC and Centerbridge Partners LP was ever in jeopardy.

In its motion to dismiss, PNGI claimed, in part, that the lawsuit was nothing more than an attempt by the shareholders to recover on bad investment decisions. The dismissal motion also cited deficiencies in the way the lawsuit was filed.

Reaction from parties and/or affiliated attorneys to the judge’s dismissal order wasn’t immediately available. The order said the plaintiffs have 10 days to file a motion to reconsider.

Citing changes in the nation’s economic climate, the buyout deal was terminated in July. PNGI reported it received a termination fee of $225 million and $1.25 billion in preferred equity investment by the proposed buyers and banks financing the proposed purchase.

PNGI includes in its holdings Thoroughbred racinos Hollywood Casino at Penn National in Grantville, Pa.; Charles Town Races & Slots in Charles Town, W.Va.; and Black Gold Casino at Zia Park in Hobbs, N. M. The company owns a total of 19 gaming facilities and/or racing operations in 14 states and Ontario, Canada.