Posted on: January 19, 2024, 08:59h.
Last updated on: January 19, 2024, 08:59h.
HG Vora, the largest investor in Penn Entertainment (NASDAQ: PENN), has called for the regional casino to restructure its board of directors, claiming that the current composition violates Pennsylvania corporate law.
In a letter to the gaming company, signed by Mandy Lam, general counsel for HG Vora, the hedge fund claims that there is an “unequal allocation” of members across the various classes of Penn directors which violates the Pennsylvania Business Corporation Law.
The current structure of the Board is legally improper and disenfranchises shareholders by artificially constricting the number of directors who may stand for re-election at the Company’s 2024 annual meeting,” according to the letter.
In a December 13D filing with the Securities and Exchange Commission (SEC), HG Vora revealed it built an 18.5% stake in Penn via common stock and options. The money manager requested the gaming company grant it board seats.
HG Vora Shows Activist Hand with Penn
HG Vora, known for investing in gaming companies, is pushing for change at Penn by demanding board seats, which is a characteristic move of activist investors. The fund also asserts that Penn’s board structure is flawed.
The timing of the hedge fund’s board activism toward the casino operator is pertinent because the company commenced director elections on Jan. 8 and the polling runs through 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 real estate on which Penn casinos reside.
HG Vora hasn’t mentioned specific Penn directors it wants to replace if any. Of the 11-member board, 10 directors are white and four are women.
“Our board of directors is made up of professionals from different disciplines, and their level of expertise is unparalleled,” according to the gaming company’s website.
HG Vora Wants Fast Remedy
HG Vora emphasizes how Penn may be in violation of the BCL and reserves all rights to take action to ensure PENN complies with the BCL and the Articles.