Following a takeover bid by its biggest shareholder, an $800m financing gap for the construction of a planned Chicago casino, a project worth $1.7bln, and a credit downgrade by the rating agencies, business flow at the Chicago-based interim establishment of Bally’s Corporation continues to grow.
Temporary casino revenue data:
Profits at Medinah Temple temporary casino rose by 12.7% last month to over $11.1m in adjusted gross income, based on information provided by the Illinois Gaming Board on April 11. Additionally, among the fifteen casinos in Illinois, Bally’s Chicago was in 4th place in terms of profit collected.
As for the admittance to the said casino, it grew by 11.6% to almost 118,000 visitors, which means that the casino took the 2nd place. First place goes to Rivers Casino Des Plaines, the top-billing and busiest casino in the state.
The interim facility hosted over 271,000 visitors and collected almost $47.8m in adjusted gross profit last month. As for Q124, it collected almost $30.3m in adjusted gross income and over $3m in domestic tax income.
However, while impressive, current profit fell short of the profit target Chicago had established for Bally’s first casino in the city. As for the profit target, the city expected the casino to collect $35m in domestic gaming taxes and $243m in adjusted gross revenue in 2024.
Commenting on this, Soo Kim, chairman of Bally’s and founding ally of its biggest shareholder, Standard General, a hedge fund in NY, commented: “We continue to build momentum month-over-month and we expect it to continue.”
$800m financing gap:
As the business flow of the interim casino, which officially opened in September and is located on River North, is currently solid, there are bigger questions about the firm’s ambitious intentions to construct a leading permanent casino also in Chicago.
Relatedly, in February, Bally’s said to the Nevada Gaming Control Board that the firm had to go through an $800m financing gap to fill the remaining $1.1bln in expenses to construct the hotel, casino, and entertainment facility in the Chicago Tribune’s River West publishing location, 30 acres long.
On that note, Bally’s Chicago general manager and vice president, Mark Wong, commented in an April 11 press release: “We are proud to offer an outstanding experience to our guests in the Medinah Temple and look forward to this summer when construction will begin on our world-class entertainment complex along the Chicago River.”
Moreover, the firm is predicted to open its permanent casino venue in 2026 officially.
Credit downgrade:
Recently, Moody’s Investors Service and Fitch Ratings downgraded the credit rating of Bally’s due to worries that a permanent casino in Chicago would leave the firm less financially stable and highly leveraged, according to the Chicago Tribune.
In March, Standard General filed a bid to purchase the remaining stockholders at a price of $15 per share, estimating the firm at approximately $648m. However, that offer is 40% below the offer that the investment bank wanted to pay in 2022 in a failed bid to purchase the firm. Standard General currently has 23% of Bally’s outstanding shares in its possession.
Bally’s Entertainment’s Board of Directors established a special committee in March and decided to keep Macquarie Capital as its financial consultant to assess the bid and inspect viable alternatives to the said bid by the Standard General. On April 11, Kim also refused to comment on the acquisition offer.
Moreover, at the beginning of April of this year, K&F Growth Capital, a minority investor, which possess below 1% of Bally’s shares, gave its opinion in a letter calling the company’s board to dismiss the said bid, which it said was a “woefully undervalued proposal.” However, it also recommended that Bally’s “offload or de-risk the Chicago project” by bringing an ally on the scene to construct and manage a permanent casino.
On that note, co-managing partner of California-based K&F, Dan Fetters, wrote in an April 11 email: “We still stand by the plan outlined in our letter.”
Nonetheless, Bally’s shares closed on April 11, meaning their price is now $13.60 per share, giving it a market capitalization of $545m.
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