Standard General Pledges to Complete Chicago Casino if it Buys Bally’s
Posted on: March 15, 2024, 04:12h.
Last updated on: March 18, 2024, 11:41h.
Standard General said it will live up to Bally’s (NYSE: BALY) commitment to build a $1.1 billion casino hotel in Chicago should the regional gaming company accept the hedge fund’s acquisition offer.
On Monday, Standard General, which owns 23% of Bally’s equity, offered $15 a share to acquire the casino operator, or less than half the $38 a share it proposed in January 2022. The hedge fund is controlled by Bally’s Chairman Soo Kim. He noted the gaming company is contractually obligated to complete the integrated resort project at Chicago Tribune’s Freedom Center printing facility.
Kim added that Standard General is committed to the Windy City, and that its newest bid for Bally’s comes with the understanding that — should the offer be accepted — the suitor must follow through on the gaming company’s opportunities, which are led by Chicago.
Bally’s was awarded the license to developed the first casino hotel in the third-largest U.S. city in 2022 by former Mayor Lori Lightfoot (D-Chicago). But the aftermath of that decision has been riddled with controversy. In December, media reports surfaced that there may be multiple investigations, including one federal, into how the city awarded the permit to Bally’s. In January, local press outlets reported that the location for the planned hotel tower will need to be changed. That’s because neither the city nor the gaming company properly accounted for underground piping that could be adversely affected by construction.
Chicago Believes Bally’s Casino Will Be Completed
Should Bally’s accept Standard General’s acquisition bid, it’s possible that new ownership will make changes. But Chicago is confident a new owner won’t affect the operator’s plans in the city.
The proposed buyout offer does not impact Bally’s obligations to the city under the host community agreement,” a spokesman for Mayor Brandon Johnson said in a statement provided to Crain’s Chicago Business. “The city is confident in Bally’s ability to meet its obligations under the host community agreement and is in continuous dialogue with Bally’s to monitor the project’s progress.”
Bally’s becoming a private company could raise concerns about the operator’s will to follow through on a plan revealed last May for an initial public offering (IPO) of shares in the Chicago venue. Such an offering would be tied to the Host Community Agreement reached between the gaming company and the city, and provides for stakes in the integrated resort to be sold to select Chicagoans.
Earlier this week, Bally’s announced the formation of a special committee comprised of board members to evaluate the Standard General takeover proposal.
Financing Concerns Still Linger
Bally’s recently acknowledged it’s working to close an $800 million funding gap on the Chicago casino, and that it’s having conversations with potential creditors to ameliorate that situation.
The operator’s cost of financing could be high, because S&P Global Ratings last week lowered the gaming company’s credit grade further into junk territory to “B-“ from “B.” S&P believes Bally’s will procure the financing necessary to complete the Chicago venture, but added the gaming company faces risks.
“Bally’s financial policy decisions, including additional development spending, potential leveraging acquisitions, and shareholder returns, pose downside risk,” according to the research firm.
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Investors in Bally's are watching closely how BALY stock struggles to surpass even a $14.00 valuation. When will Bally's accelerating casino revenue that is hoped for actually be achieved? An important factor in generating that revenue includes retaining new customers. Bally's Chicago will get only one chance to make that first impression with each new customer. Ask Bally's current casino hotel guests nationwide if they are genuinely happy with their most recent visits to the many Bally's casino hotel properties throughout the country. Read the most recent online reviews for Bally's casinos posted in just the past six months. Ask those same patrons how soon they plan to return. Are they telling their friends, "That was really a great time at Bally's last weekend! It was over the top and I enjoyed everything about ithe place. Let's plan to go back there as soon and often as we can!" You won't find a single review like that, especially if you don't take the time to actually look for the current pulse check of what is going on right now. Maybe repeating the same actions over and over again while expecting different results will not contribute to the accelerating casino revenue that is being hoped for by Bally's. Those current customer reviews spell it out right now in real time.
The citizens of Chicago need to keep a very close eye on this as Standard General and Bally's are jockeying for position. Don't choose to sit back and just hope for updates from Chicago's local media. These ongoing financial struggles for Bally's Chicago's future aren't going away. It takes proper funding to be able to line up with golden shovels at a ground-breaking ceremony with cheerful and beaming smiles. That Bally's Chicago casino will bring problems that were never anticipated, specifically gambling addiction. So, what does gambling addiction look like? How is that officially described anyway? It's not a vague definition that varies from person to person depending on their own individual and specific circumstances. The DSM-5's (Google it) official criteria for diagnosis are exhibiting FOUR of the following NINE criteria during the past 12-month period: -- Need to gamble with increasing amounts to achieve the desired excitement. -- Restless or irritable when trying to cut down or stop gambling. -- Repeated unsuccessful efforts to control, cut back on or stop gambling. -- Frequent thoughts about gambling (such as reliving past gambling or planning future gambling). -- Often gambling when feeling distressed. -- After losing money gambling, often returning to get even. ("chasing" one's losses.) -- Lying to hide gambling activity. -- Risking or losing a close relationship, a job, or a school or a future job opportunity because of gambling. -- Relying on others to help with money problems caused by gambling. That's it. No need to guess about the official criteria anymore. No need to wonder about what to look for. Friends and family members should now know exactly what to look for. Start speaking out before Bally's or Standard General can break out those golden shovels and smile for the evening news coverage. If you choose to maybe bet it all on Red or Black, don't forget about that "0" and "00."
To Bally's: Good luck and best wishes!