Mayor Brandon Johnson looks on as Soo Kim, chairman of the board of directors at Bally’s Corporation, speaks during a ribbon-cutting ceremony at Bally’s Casino Chicago at Medinah Temple in River West, Tuesday morning, Oct. 3, 2023. Kim is trying to take the publicly traded Bally’s private.
Ashlee Rezin/Sun-Times
As Bally’s races to secure financing to bridge an $800 million “funding gap” for its its planned Chicago mega-casino, the publicly traded corporation could soon become privately owned.
Bally’s on Tuesday formed a special committee to evaluate a bid from New York hedge fund Standard General, which already owns about a quarter of the company, to buy out shareholders at $15 per share.
That marks a premium over Bally’s Tuesday afternoon price of $13.88 — but it’s less than half the value offered two years ago by the hedge fund and its founding partner, Soo Kim, who is Bally’s chairman.
Kim previously tried to take the company private at $38 per share in 2022, shortly before former Mayor Lori Lightfoot named Bally’s her chosen operator for the coveted Chicago casino license.
Bally’s price has fallen and its debt has grown since a committee rejected that takeover bid. The corporation ended 2023 with $163.2 million in cash and $3.6 billion in debt, executives said during a quarterly earnings call last month.
Kim could not be reached for comment Tuesday.
In a letter to Bally’s board of directors, Kim said the proposed buyout allows shareholders “to immediately realize a premium price, in cash, for their investment and provides stockholders certainty of value for their shares, especially when viewed against the operational risks inherent in the Company’s business and the market risks inherent in remaining a publicly-listed company.”
Bally’s said the committee evaluating the takeover bid would also explore “potential strategic alternatives to the proposal.”
The bid comes as Bally’s, which runs 16 casinos nationwide, tries to lock up financing for its permanent Chicago casino at 777 W. Chicago Ave., where construction is supposed to start this summer.
Under a host city agreement signed with Lightfoot’s office, Bally’s is contractually obligated to spend at least $1.34 billion on its temporary casino, which has been operating since late last summer, and permanent structure, which under state law must open by September 2026.
Bally’s chief financial officer, Marcus Glover, told the Nevada Gaming Control Board earlier this month that the company still has to spend another $1.1 billion on the Chicago project. But it has yet to secure most of that financing with only a few months to go before shovels are supposed to go into the ground at the current site of the Chicago Tribune printing plant.
Glover said the company has a source to solve a “funding gap” of about $800 million on the project, saying Bally’s executives “feel pretty good” about securing a deal with the unnamed lender “by hopefully summer of this year.”
Besides its funding, the permanent casino’s layout also remains in flux. Bally’s revealed earlier this year that it needs to relocate a massive hotel tower planned for the site to avoid damaging city water pipes. They’re still working with city planners to figure out where to put the tower.
Mayor Brandon Johnson’s office didn’t respond to a request for comment. Last week, the mayor’s office told Crain’s Chicago Business that “advisers have indicated to us that Bally’s is going through the normal financing process. Therefore, we have no concerns at this time.”
Bally’s temporary Medinah Temple casino in River North has quickly emerged as one of the most popular casinos in Illinois, but it’s fallen well short of projections set by both Lightfoot and Johnson.
Gamblers made more than 105,000 trips through the turnstiles of the casino at 600 N. Wabash Ave. in February, when Bally’s turned a profit of nearly $9.9 billion, generating just over $1 million for city police and firefighter pension funds.
Average monthly revenue from the casino would have to more than triple for it to reach the $35 million Johnson has earmarked from it for his 2024 city budget.