“HG Vora blasts Penn Entertainment for framing issues”
HG Vora, the largest investor in Pennsylvania Entertainment Corp. (NASDAQ: PENN ), is asking the region's casinos to reorganize their boards, while claiming the current makeup violates Pennsylvania corporate law.
In a recent letter to the gaming company signed by HG Vora general counsel Mandy Lam, the hedge fund claimed that Penn's membership was "unevenly distributed" among various types of directors, violating Pennsylvania's business corporation law. 1988 (BCL) and the operator’s own regulations.
"The current board structure is legally inappropriate and disenfranchises shareholders by artificially limiting the number of board members who can be re-elected at the company's 2024 annual general meeting," the letter said.
In a Dec. 13 filing with the U.S. Securities and Exchange Commission (SEC), HG Vora announced it had taken an 18.5% stake in Penn through common stock and options. The asset manager asked the bookmaker to grant him a board seat.
HG Vora lends activist hand to Penn
HG Vora, a long-time investor in gaming companies, says it is pushing for change at the University of Pennsylvania, demanding a board seat — a hallmark of many activist investors. This activism continues to claim that Penn’s board of trustees structure is flawed.
The hedge fund board activity is tied to the casino operator's timing, as the company begins electing directors on Jan. 8 and the election will run until Feb. 7. Penn's 11 directors include CEO Jay Snowden and Gaming and Leisure Properties (Nasdaq: GLPI) CEO Peter Carlino. GLPI is the largest owner of casino hosting properties in Pennsylvania.
HG Vora did not name any specific Penn regents she would like to replace if necessary. Of the eleven board members, ten directors are white and four are women.
"Our board of directors is comprised of professionals from multiple disciplines, including investment banking, wealth management, tax accounting and consulting, advertising, gaming/entertainment and more, and their expertise is unparalleled," the gaming company's website states.
HG Vora wants a quick fix
In addition to the intricacies of corporate governance, HG Vora explains how Penn breached the BCL. The hedge fund noted in its letter to the board that Penn had seven board members in 2020, including two each in Type I and Type III roles and three each in Type II roles. In November, the number of directors increased with the addition of one more member from level three to level eight.
HG Vora added that just two days before Penn’s 2021 annual membership meeting, another class leader has been added, bringing the group to four members.
"Thereafter, the distribution of PENN members among the various categories of Board of Directors (2 members for Category I, 3 members for Category II, 4 members for Category III) did not comply with the BCL and Articles of Incorporation requirements regarding class size"almost as much as possible," The asset manager wrote. “We expect the company to address this breach immediately and we reserve all rights to take action to ensure PENN complies with the BCL and the company’s articles of association. "
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Source: www.casino.org
