Standard General Targets Bally’s with $648 Million Buyout Plan

Standard General, holding a 23% stake in Bally’s as its principal investor, has made a bid to purchase the casino firm for around $648 million. This move by Soo Kim, the Chairman of Bally’s, alongside the New York hedge fund, aims to secure all outstanding shares at $15 each, which places Bally’s market value at this figure. This offer represents a rise over its current market price but is notably lower than Standard General’s previous $38 per share offer in 2022.

Kim expressed frustration over the stock’s performance, stating, “For whatever reason, the shares have not traded well. There’s nothing more that we can do, other than speak through action, and our action is to multiply down on our commitment to this company and buy shares at a healthy premium to current shareholders,” as reported by the Chicago Tribune.

After winning the bid for Chicago’s inaugural casino in 2022, valuing Bally’s at nearly $2.1 billion, the company has since seen its share price decline, influenced by the financial strain of its ambitious $1.74 billion Chicago project among other factors.

The decline in Bally’s market value is attributed to concerns over its financial health and external economic pressures such as inflation and increased interest rates. By the close of the fourth quarter, Bally’s had $163 million in cash but was burdened with $3.6 billion in debt.

With a funding shortfall of $800 million for the Chicago casino, set to be located on a 30-acre site in River West, construction is planned to start this summer, aiming for a 2026 opening.

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The project received city approval in December 2022 for a large-scale entertainment venue, featuring various amenities. Adjustments were made in January to the hotel’s location to protect nearby city infrastructure.

Despite financial challenges, Bally’s is committed to investing over $1.34 billion in its Chicago ventures, which exceeds the initial estimate. This does not include certain costs outside of construction expenses.

After Standard General’s previous takeover offer was declined in May 2022, they continue to support Bally’s, especially the Chicago casino initiative. Bally’s operates 16 casinos across 10 states.

Bally’s temporary Chicago location has shown promising revenue but has yet to reach the city’s expectations for significant tax contributions. The development of the permanent site is critical for both the city’s financial projections and Bally’s ambitions.

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