Bally's Strategic Considerations Regarding Tropicana Land Sale and Takeover Bid

Bally's Corporation, a prominent player in the gaming industry, is currently considering strategic moves regarding its assets and financial operations. A recent development has seen the Las Vegas-based company pondering the potential sale of the land housing the Tropicana, a move aimed at bolstering its financial position to support a significant project in Chicago. This decision comes amid a bid by Standard General, Bally's largest shareholder, to take over the company, a move that has garnered mixed reactions from investors and industry experts.

SG's Offer and Bally's Challenges

Colin Mansfield, Vice President of Credit Research at CBRE Credit Research in Las Vegas, has shed light on this development in a recent report to investors. Mansfield's analysis indicates a degree of uncertainty surrounding the bid, with less than a 50% chance of its acceptance. The bid, led by Standard General's Soo Kim, offers $15 per share for a complete buyout of Bally's, a move that would take the company private.

Mansfield made his report and said: "The offer is round two for SG attempting to take Bally's private, with the first attempt at $38 a share in 2022. There are still several unknowns, but we assign a less than 50 percent chance the deal is accepted."

Bally's has formed a special committee to evaluate this offer, signaling a careful and measured approach to significant strategic decisions.

The financial landscape for Bally's has been under scrutiny, especially concerning its Chicago project. The company has identified an $800 million shortfall in financing for this project, which is slated to begin construction later this year. This shortfall has underlined the importance of strategic financial planning and asset management for Bally's.

Mansfield also added that: "The SG offer adds to the overhang on the credit, which comes at a critical time as Bally's seeks financing to fund its large-scale Chicago development, weighs its options for the recently closed Tropicana Las Vegas and works to improve the equity and credit narrative. On the surface, we believe the SG offer creates more noise and may distract from Bally's Chicago financing efforts."

The Tropicana site, covering nine acres, has garnered attention due to its potential for development, including a proposed Major League Baseball stadium. 

''Bally’s landlord real estate investment trust Gaming &Leisure Properties Inc. for construction of a $1.5 billion, 33,000-seat Major League Baseball stadium for the relocating Oakland Athletics.''

However, legal and logistical challenges have added complexity to these plans, with ongoing debates and court battles shaping the future trajectory of this project.

Strategic Decision-Making

In light of these developments, Bally's has emphasized the importance of evaluating all available options and making informed decisions that align with its long-term goals and financial stability. The company's interactions with investors, regulators, and stakeholders will play a crucial role in shaping its strategic direction in the coming months.

Source:

''Bally’s could sell Tropicana land, analyst says'', reviewjournal.com, April 09, 2024.