Bally's Corp amends merger agreement, introduces Class A stock

Bally's Corporation (NYSE:BALY), a prominent player in the hotel and entertainment sector, announced on Monday an amendment to its merger agreement, which now includes provisions for a new class of stock. This development follows the original merger agreement dated July 25, 2024, with SG Parent LLC and related parties.

The amended agreement, approved by Bally's Board and a special committee of independent directors, introduces a new Class A Common Stock. This stock class is intended to have rights nearly identical to the existing common stock, apart from a conversion feature, and is expected to be tradable by non-affiliates and non-restricted shareholders until just before the merger's completion.

The amendment was necessitated by changes to the Rolling Share Election mechanism in the original merger agreement. If Bally's stockholders approve the related Certificate of Amendment, the company will issue Class A Common Stock after the Election Deadline, aiming to do so within two business days.

However, if stockholder approval for the Certificate of Amendment is not obtained, the Rolling Company Shares will continue as common stock until the merger is effective. In such a case, an additional period for Rolling Share Elections may be provided, subject to legal compliance and the discretion of Parent and the company.

The proposed amendment is part of a larger merger transaction involving Bally's Corporation and entities controlled by Standard General L.P., with Soohyung Kim, Standard General's Managing Partner, serving as the Chairman of Bally's Board. Standard General and Mr. Kim collectively hold a significant stake in Bally's Corporation.

In other recent news, Bally's Corporation has reported a moderate increase in its Q2 2024 earnings, showing a 3% year-over-year rise in revenues to $622 million. The company announced significant strategic moves including a $940 million construction and financing deal for its Chicago casino, a merger with The Queen Casino & Entertainment Inc., and the redevelopment of the Tropicana site in Las Vegas. However, the International Interactive segment saw a 7% decline, with Japan's market affecting performance.

Despite these advances, Bally's expects an adjusted EBITDA loss of $30 million for the North America Interactive segment in 2024. Bally's also disclosed plans for a licensing submission in New York for a new resort in 2025. On a bearish note, the company expects to continue dealing with non-rated play challenges until 2027.

InvestingPro Insights

As Bally's Corporation navigates through its merger process, investors are closely watching the company's financial health and stock performance. According to InvestingPro data, Bally's has a market capitalization of approximately $694 million, with a notable revenue growth of 5.27% over the last twelve months as of Q2 2024. Despite this growth, the company is not anticipated to be profitable this year, and it operates with a significant debt burden. The stock's price movements have been quite volatile, and it's currently trading near its 52-week high, with a strong return of 41.84% over the last three months.

InvestingPro Tips highlight that management has been aggressively buying back shares, which could be a sign of confidence in the company's future. However, the stock is in overbought territory according to the Relative Strength Index (RSI), suggesting that caution may be warranted. It's also worth noting that Bally's does not pay a dividend, which might influence the investment decisions of income-focused shareholders.

For those seeking a deeper analysis, InvestingPro offers additional tips on Bally's Corporation, providing valuable insights for a more informed investment strategy. Visit InvestingPro for a comprehensive list of tips and to gain access to the full suite of analytical tools.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.