PROVIDENCE – A hedge fund and largest shareholder of Bally’s Corp. – the Rhode Island-based company that operates the state’s only two casinos – has proposed buying all outstanding stock in the company to take full ownership.
Standard General LP submitted a letter to Bally’s board of directors Tuesday that said it would pay $38 a share – nearly 30% more than Monday’s closing price of $29.27 on the New York Stock Exchange. The news rocketed the share price to $36 when trading opened on Tuesday morning.
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The letter states the proposal could be withdrawn by Standard General at any point. The proposal does not constitute a formal tender offer.
The fortunes of Bally’s are of special significance to the state because the Rhode Island casinos, Bally’s Twin River Lincoln Casino Resort and Bally’s Tiverton Casino & Hotel, are two of the biggest sources of funding for the state’s $13 billion budget.
Bally’s also employs 1,800 people in Rhode Island and last year inked a 20-year lottery contract with the state and International Game Technology PLC that allows Bally’s to strengthen its control over casino gambling in Rhode Island.
The R.I. Department of Revenue said it is monitoring the developments at Bally’s. “We anticipate the buyout of Bally’s shareholders by Standard General will not have any material impact on Bally’s Rhode Island operations nor commitments,” said spokesman Paul Grimaldi.
Standard General, based in New York, holds nearly 20% of Bally’s shares. The hedge fund’s founder and managing partner, Soohyung Kim, has been chairman of Bally’s since 2019. After Standard General, the top 10 largest shareholders of Bally’s stock are investment funds and a mutual fund that hold a combined 23% of the shares.
Standard General’s letter to the Bally’s board that said it expects the board to appoint a special committee of independent directors to consider its proposal and make a recommendation to the full board.
Bally’s public data shows that there are 54.4 million outstanding shares. If Standard General holds about 19% – or 10.3 million – of those shares, that means there are about 44.1 million remaining shares. At $38 per share, that would place the price of the buyout proposal at $1.68 billion.
The letter, signed by Kim, said the hedge fund would not proceed with the transaction if it is not approved by the special committee. The transaction would also require the approval of holders of the majority of Bally’s shares not owned by Standard General.
Kim said in the letter to Bally’s board of directors that Standard General did not anticipate problems in securing financing for the buyout, which he said would be paid for through “sale and lease back and other long-term financing arrangements.”
If the proposal were not approved by the special committee, Standard General said it would still continue as a long-term shareholder.
UPDATE clarifies that Standard General has proposed buying all outstanding shares but has not made a formal tender offer.
UPDATE adds comment from the R.I. Department of Revenue spokesperson Paul Grimaldi.
William Hamilton is PBN managing editor. Contact him at Hamilton@PBN.com. You may also follow him on Twitter @waham.
