Shares of Penn Entertainment rose by 7% due to the likelihood of a change in the board of directors.

Summary

HG Vora Capital Management is seeking to obtain seats on the board of directors of Penn Entertainment Inc., according to a regulatory filing. HG Vora owns an 18.5% stake in the casino group. The fund expressed concern about the capital allocation management of Penn Entertainment.

Penn Entertainment Shares Rise by 7%

Penn Entertainment Inc. (PENN) shares rose as much as 7% on Thursday after it was revealed that a major investor is seeking board seats at the casino operating company.

HG Vora Capital Management Seeks Board Seats at Penn Entertainment

HG Vora Capital Management holds an 18.5% stake in Penn Entertainment, including futures, and is in discussions with the company regarding potential board seats, according to a regulatory report. It was not clear how many seats the investment fund, managed by former Goldman Sachs banker Parag Vora, was seeking.

Opportunity to Nominate New Members to Penn Entertainment’s Board

The opportunity to nominate new members to Penn Entertainment’s board starts before its annual meeting for 2024 from January 8 to February 7, 2024. The Wall Street Journal reported, citing sources close to the matter, that the investment fund may resort to a proxy fight if its negotiations fail to secure board seats.

HG Vora Capital Management’s Request to Appoint Qualified Members to Penn Entertainment’s Board

HG Vora stated in its 13D report filed on Thursday with the Securities and Exchange Commission (SEC): “Given the continued poor performance of the common stock and the capital allocation track record of the issuer, along with other areas of concern, the reporting persons have requested that the issuer grant them the right to appoint qualified members who are fully committed to working with management of the issuer and other board members to help the issuer realize its full potential.”

Penn Entertainment’s Decline from the S&P 500

Penn Entertainment was removed from the S&P 500 index in September 2022, less than two years after being added. During its brief time in the index, Penn’s stock price fell by about 75% from $130 to just $31.

Penn Entertainment’s Stock Decline This Year

Despite the gains made by Penn Entertainment shares on Thursday, they have declined by more than 10% since the beginning of the year.

Source: https://www.investopedia.com/penn-entertainment-up-7-on-potential-board-shakeup-8420628