HG Vora, a Manhattan-based financial firm and one of Penn Entertainment’s major investors, has been at loggerheads with the company and its management. Preceding the company’s shareholders’ meeting, HG Vora nominated three new directors to the board, but only two were chosen.
Penn Accepts Two New Directors
Johnny Hartnett and Carlos Ruisanchez were handpicked by HG Vora to ascend to Penn Entertainment’s Board of Directors, and after a meeting that lasted barely over 10 minutes, they were voted in and welcomed by Penn’s Board.
After the meeting was adjourned, Penn’s board of directors released the following statement: “We are pleased to welcome Johnny and Carlos, both of whom bring highly relevant experience in digital and retail gaming to the Board.
“Over the past several months, we have continued to engage with our shareholders, and we look forward to incorporating feedback from those conversations as we move ahead. It is clear from this engagement that PENN’s Board, management team, and shareholders are aligned in their focus on ensuring PENN is achieving its full potential.”
Three Seats Promised, Two Delivered
Former Penn Entertainment chief financial officer William Clifford was the third candidate chosen by HG Vora, but the open three spots dropped to two, while Penn’s C-suite objected to Clifford as not being a good fit for the position.
Parag Vora, founder and portfolio manager of HG Vora, stated, “PENN’s shareholders have voted overwhelmingly for genuine change, including for the election of William Clifford to the Board.
“There can be no mistake about the mandate from PENN’s shareholders that the status quo is simply unacceptable. We are grateful for the strong support the three independent nominees have each received from shareholders and are confident that Johnny and Carlos will work constructively with their fellow directors to drive shareholder value.”
HG Vora Among Many Angry Investors
Penn Entertainment, under the direction of CEO Jay Snowden, has gone from a solid land-based casino business to a wheeling-dealing entity within the digital gaming space. That has not fared well for its stock price, nor has it assuaged its investors, chief among whom is HG Vora, a financial firm that owns 4.8% of the Penn Entertainment stock.
The company vociferously disagrees with the direction of the company, as Snowden purchased the Barstool Sports media empire for $650 million with the express aim of creating the Barstool Sportsbook before pivoting only six months after the deal was finalized to dissolve the Barstool Sportsbook in favor of striking a 10-year, $2 billion pact with ESPN to create ESPN Bet.
This has led to HG Vora going public with its displeasure, and Parag Vora stated, “Penn’s shareholders have voted overwhelmingly for genuine change, including for the election of William Clifford to the board. There can be no mistake about the mandate from Penn’s shareholders that the status quo is simply unacceptable.”
HG Vora has filed a federal lawsuit claiming it was illegal for Penn to reduce the number of seats on the board from three to two.
Penn not only defended its decision but also stated unequivocally why Clifford was not approved as a viable board member. Penn stated, “Mr. Clifford lacks digital gaming and online sports betting experience—areas essential to the future of Penn’s business and the industry—and his general experience is redundant with the significant real estate and financial expertise already represented on our board.
“We offered HG Vora several reasonable proposals to reach a mutually agreeable resolution and, as noted above, ultimately determined that Mr. Hartnett and Mr. Ruisanchez would be value-additive to the Board. (….) However, HG Vora quickly rejected every one of our proposals and never offered up a counter-proposal other than the appointment of all three of its nominees or a settlement involving the appointment of two of its nominees in addition to impermissible commitments around governance and strategic changes.”
