Bally shareholders fight over ownership, development project | Wilnesh News

Las Vegas’ famous Tropicana closes Tuesday, its operator Bally Company are facing their own battle for survival. At stake: ownership, the status of a public company and its most high-profile projects.

Bally Chairman Soo Kim and Standard General, the private equity fund he founded, offered last month to take the company private at $15 a share. Before he made his offer, the stock was trading at about $10 a share. Standard General said last month it holds about 23% of Bally’s stock.

But some prominent investors believe King undervalues ​​the company, and they say the same is true for the market, which has lost confidence in the company’s strategy and financial stability.

Dan Fetters and Edward King of asset management fund K&F Growth Capital on Tuesday sent a letter to the special committee established to review King’s proposal. The letter urged members to reject the proposal.

Instead, Fetters and King came up with a strategy that would return Bally’s to its casino roots.

Bally’s operates 16 casinos in 10 states, as well as interactive businesses such as sports betting, online games and free games. The company has announced plans to build Chicago’s first casino and resort to replace the historic Tropicana Casino on the Las Vegas Strip and is working to win a gambling license for the former Trump golf course in New York City.

Fetters and King believe Bally’s should stay true to its course and not waste money on non-core businesses. They insist the company doesn’t know how to build or operate a high-end casino or online sports betting and online gaming business, and say spending on those projects has contributed to a decline in the stock price and market value.

The company’s shares have fallen nearly 30% in the past 12 months.

Fetters and King argued in their letter that King “proposed to exploit this vulnerability and acquire Bally’s for a fraction of its fair value.”

“Bets on large, underfunded development projects, AOL’s failed execution, casino resort properties lagging regional peers, overleveraged balance sheets, dim prospects for near-term deleveraging, and irresponsible capital Allocation decisions, these drive stock and bond prices down. This is something the investment community is not interested in,” the letter reads.

Shareholders also took issue with Bally’s $69 million in stock buybacks in the fourth quarter.

Standard GE said last month that the proposed going-private transaction “will allow the company’s shareholders to realize an immediate premium in cash on their investment and provide shareholders with certainty about the value of their shares, particularly relative to the value of the company’s shares.” .” The operational risks inherent in the company’s business and the market risks inherent in being a listed company. “

Fetters and King’s letter recommended bringing in a better-equipped partner for the Chicago casino. Hard Rock International, owned by Florida’s Seminole Tribe, also bid for a casino license there. But Bally won with a $1.7 billion commitment, and development plans have since been slashed to $1.1 billion. In March, Bally’s chief financial officer told Nevada regulators the company was seeking $800 million in financing for the project.

Fetters and King also wrote that Bally’s would benefit from a partnership or an outright sale of its Tropicana business in the strip. The building, which opened in 1957, will close Tuesday and prepare for demolition. An integrated resort will be built near the MLB Athletics’ new ballpark, which is moving from Oakland to Las Vegas.Gaming REIT Gaming and leisure real estate Own this website.