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Investing.com -- Bally’s Corp. has announced the completion of its merger with Standard General L.P., the company’s largest shareholder, and The Queen Casino (EPA:CASP) & Entertainment Inc. To finance the merger, Bally’s utilized $500 million of senior secured notes due 2028, provided by funds managed by Apollo, in conjunction with its available cash. This resulted in a cash merger consideration of $416 million to shareholders who chose not to rollover their equity and $107 million to repay The Queen’s debt.
This new debt has led to a downgrade in Bally’s secured debt rating from ’B+’ to ’B’ by S&P Global Ratings on February 12, 2025. The downgrade is due to the new secured notes ranking equally with Bally’s secured credit facility, which negatively impacts the recovery prospects for existing secured lenders. Despite the downgrade, all other ratings for the company, including the ’B-’ issuer credit rating, have been affirmed. The stable outlook for Bally’s is based on the expectation that the company will generate modest EBITDA growth and maintain adequate liquidity for operating needs, despite high leverage from development projects spending.
As part of the merger, Standard General acquired outstanding shares that Bally’s shareholders did not elect to roll over, making it the majority owner with approximately 74% of the company. The merger also included a combination with The Queen Casino & Entertainment Inc., a majority-owned regional casino operator of Standard General.
Bally’s is currently working on a permanent casino in downtown Chicago, slated to open in September 2026. The company expects to spend about $1.4 billion in total capital expenditures through 2026, including the Chicago development.
The Queen Casino & Entertainment Inc. is also undergoing a landside development and hotel renovation of Belle of Baton Rouge in Louisiana, set to be completed by September 2025. The Queen has secured funding commitments of up to $12.5 million for a second landside development project at Casino Queen Marquette, also set to be completed in 2025. These expansions are expected to increase the combined company’s EBITDA base, expanding Bally’s Casino & Resorts segment to 19 gaming, entertainment, and hospitality facilities across 11 U.S. states.
Despite the recent developments, Bally’s faces execution risks with its permanent facility in Chicago due to high gaming supply and competition within the market. The company will need to leverage its location advantage to meet its target of generating $250 million of EBITDAR annually at the permanent facility.
Bally’s performance in 2024 fell short of expectations due to operational challenges in Lincoln, R.I. and Atlantic City, NJ. The company anticipates 2025 to be another year of muted regional gaming revenue growth as consumer spending weakens and unemployment rises. Despite these challenges, Bally’s is expected to generate modest organic revenue growth in its core brick and mortar portfolio and higher growth from its digital operations, particularly in North America, as it expands its digital presence in new markets.
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