Summary
- HG Vora is once again targeting PENN Entertainment.
- The conflict arises from the exclusion of a candidate for the Board of Directors.
- HG Vora alleges that PENN is restricting shareholders' rights for its own benefit.
Activist investor HG Vora, a vocal critic of PENN Entertainment and its management practices, has filed a lawsuit against the company.
HG Vora is back up arms against PENN’s top management
After what seemed like a reconciliation between the two parties, HG Vora has resumed its offensive stance, accusing PENN of not supporting shareholder democracy. This democratic approach allows shareholders to propose and nominate candidates for the company's Board of Directors, thereby influencing the company's overall direction. In a lawsuit filed with the US District Court for the Eastern District of Pennsylvania, HG Vora claims that PENN prevented the shareholder from appointing three members to its Board of Directors. HG Vora believes the Board's manipulation of the company's election rules is a violation of shareholder democracy, serving only the interests of incumbent directors, especially the Chairman and CEO. HG Vora insists that significant changes are needed to restore accountability and ensure all options are explored to maximize shareholder value, the firm stated. HG Vora has been critical of the company’s management, questioning its payment practices and the results of current operations, which have repeatedly shown PENN falling short on key performance metrics with the ESPN Bet brand. The activist investor argues that PENN violated its fiduciary duties by reducing the number of board candidates from three to two. Specifically, HG Vora wanted William J. Clifford to join the Board, but this was denied. Despite this, PENN proceeded with appointing Johnny Hartnett, former CEO of Superbet, and Carlos Ruisanchez, CEO of Sorelle Capital, as board members.
Shareholder democracy compromised, self-serving interests suspected
HG Vora has further allegations, claiming that PENN violated federal securities laws by making false and misleading statements and omissions in proxy materials. The activist investor contends that when PENN announced the appointments of Ruisanchez and Harnett to the Board, they misleadingly suggested that HG Vora had agreed to this decision. However, HG Vora argues this is inaccurate, especially since Clifford is conspicuously absent. HG Vora accuses PENN of acting out of self-interest without any legitimate cause. The Board Reduction Scheme by PENN, executed during a contentious election and while facing the potential loss of three Board seats, is seen by HG Vora as a self-serving action lacking legitimate corporate purpose, stated the activist investor.
