Standard General Pledges to Complete Chicago Casino if it Buys Bally’s

If the local gaming corporation accepts the hedge fund's buyout bid, Standard General said it will fulfill Bally's (NYSE: BALY) pledge to construct a $1.1 billion casino hotel in Chicago.

Standard General, which has 23% of Bally's shares, made a bid to buy the casino operator on Monday for $15 per share, which is less than half of the $38 per share it had suggested in January 2022. Soo Kim, the chairman of Bally, is in charge of the hedge fund. He pointed out that the gaming firm has a contractual duty to finish the integrated resort project at the Chicago Tribune's printing facility at Freedom Center.

Kim clarified that Standard General is dedicated to the Windy City and that its most recent offer for Bally's is contingent on the suitor fulfilling the gaming company's opportunities, which are spearheaded by Chicago, should the offer be accepted.

In 2022, former Mayor Lori Lightfoot (D-Chicago) granted Bally's the license to create the first casino hotel in the third-largest U.S. city. But there has been a great deal of criticism about that choice. The city's decision to grant Bally's a permit may be the subject of several investigations, including a federal one, according to media reports that surfaced in December. 

Local media sources revealed in January that the intended hotel tower's site would have to be modified. This is due to the fact that neither the gaming firm nor the city appropriately considered subterranean plumbing that might be negatively impacted by development.

 

Chicago Is Confident Bally's Casino Will Be Finished

It's likely that Bally's will undergo adjustments if Standard General's purchase bid is accepted. Chicago, though, is certain that the operator's intentions for the city won't be impacted by a new owner.

 

"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.”

Concerns regarding Bally's commitment to carry out a plan unveiled in May for an initial public offering (IPO) of shares in the Chicago venue may arise as a result of the company becoming private. Such an offering would be subject to the Host Community Agreement, which specifies that some Chicagoans will be able to purchase shares in the integrated resort. The agreement was made between the gaming firm and the city.

Bally's said earlier this week that a special committee consisting of board members has been formed to assess the Standard General buyout bid.

Financial Issues Continue to Hang On

In an effort to improve the situation, Bally's recently admitted that it is seeking to address a $800 million funding gap on the Chicago casino and that it is in talks with possible creditors. Given that S&P Global Ratings downgraded the gaming company's credit grade from "B" to "B-" last week, the operator may have hefty financing costs. S&P noted that although the gaming company faces risks, it is confident Bally's will secure the funding required to finish the Chicago project.

“Bally’s financial policy decisions, including additional development spending, potential leveraging acquisitions, and shareholder returns, pose downside risk,” according to the research firm.