In a federal regulatory filing last week, Penn National Gaming Co. addressed the stinging loss the Iowa Racing and Gaming Commission delivered to the publicly traded company on April 18.
The commission awarded a gaming license to a Hard Rock-branded casino in downtown Sioux City. Two other developers, including Penn, the owner of the Argosy Sioux City riverboat casino, also applied for the land license. It marked the first time an Iowa casino operator has been displaced through competitive bidding.
In an April 23 filing with the Securities and Exchange Commission, Penn said the IRGC "has indicated that it intends to permit the company to continue operations at its Sioux City facility until such time as the new casino opens to the public, but not beyond."
"The company already has several legal actions pending that relate to this issue, is currently reviewing all of its options, and will maintain an open dialogue with the IRGC, Sioux City officials and its employees regarding the IRGC’s decision," Penn said in the 8K filing.
In light of the decision, though, Penn said it believes the "fair value of its Sioux City reporting unit will be less than its carrying amount." The company said it expects to record a goodwill and other intangible asset impairment charge of between $65 million and $80 million in its results for the second quarter.
The exact amount of the charge will be determined after the company completes its analysis of the estimated future expected cash flows it anticipates receiving from the Sioux City operation, the filing said.
Once impaired, under U.S. standards, an asset typically cannot be revalued upward, even if the conditions of impairment are reversed, such as a business winning a court decision.