Grim Reaper comes for Penn National LBO

And then there were two.

With the demise today of the takeover deal for casino and racetrack operator Penn National Gaming Inc, the last big leverage buyouts still waiting to be put out of their misery are the takeovers of chemicals company Huntsman Corp and Canadian phone company BCE Inc.

The $6.1 billion takeover of Penn National died after the buyers, Fortress Investment Group and Centerbridge Partners, and their lenders were unable — or unwilling — to come to terms and save the deal.

It seems the Grim Reaper had shed his hood and plowshare, and taken out his calculator to see how much money he wouldn’t lend buyout firms, and reinvented himself as the ghastly Credit Crisis.

The Grim Reaper has been a busy boy, making his way down the LBO “death list” of imperiled deals like a prison warden picking off death row prisoners one by one. In the past year, his deadly touch has killed eight LBOs worth a total of $56 billion, including the $8 billion deal for audio equipment maker Harman International Industry and the attempted $25 billion buyout of student lender Sallie Mae.

The last major LBOs still standing are the Huntsman and BCE deals. But even those deals are in the intensive care unit.

The battle over BCE’s $34.1 billion buyout could continue through the end of the year as the banks funding the deal press for economic concessions, such as the interest rates paid and the covenants or safeguards put on the loan, a source familiar with the situation told Reuters.

Huntsman, meanwhile, is locked in a legal battle with Hexion Specialty Chemicals and private equity firm Apollo Management. The Grim Reaper may have a bit more work to do though if he wants to kill the $6.5 billion LBO of Huntsman since the European Union just okayed the deal.

Let’s hope the BCE and Huntsman heed the advice of 70’s arena rock group Blue Oyster Cult: Don’t Fear the Reaper.