Bally’s Creditors Hire Lawyers to Possibly Block Rhode Island Casinos Real Estate Deal

Posted on: June 23, 2022, 02:56h. 

Last updated on: June 23, 2022, 04:12h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Bally’s (NYSE:BALY) creditors, led by Fidelity, have hired legal counsel in a bid to potentially block the gaming company’s plans to engage in a $1 billion sale-leaseback of its two Rhode Island casinos.

Bally's
Bally’s Twin River Lincoln Casino in Rhode Island. Creditors could stop the company from selling real estate assets in the state. (Image: Bally’s)

It’s believed holders of $1.9 billion worth of Bally’s debt hired law firm Willkie Farr & Gallagher to represent them in a potential legal tussle with the gaming company. The Providence-based regional casino operator is looking to sell the property assets of Bally’s Twin River Lincoln Casino Resort and Bally’s Tiverton Casino & Hotel, and then leaseback the venues.

Owners of the debt maturing in 2028 can forbid efforts to amend that credit agreement, and Bally’s needs that pact to be altered to proceed with the sale of the Lincoln venue. Citing unidentified sources familiar with the matter, Bloomberg reports Bally’s only needs creditors’ approval to sell the Lincoln gaming property.

The company is reportedly offering a sweetener of 50 basis points to that debt to compel lenders to sign off on the real estate deal.

Bally’s Twin River Lincoln Casino Resort and Bally’s Tiverton Casino & Hotel are two of the 14 casinos the company currently operates across 10 states.

In Rhode Island Plan, Chicago on Bally’s Mind

Assuming lenders approve the Rhode Island transaction, it’s widely expected that Bally’s will use some of those proceeds for a planned Chicago integrated resort.

Last month, Bally’s was selected as the winning bidder to develop a $1.7 billion casino-hotel on the Chicago River on the city’s Near North Side. The gaming company recently doled out a $40 million upfront payment to the city as part of that plan.

It’s also possible Bally’s uses some of the proceeds from the Rhode Island land deal to repurchase its own shares or fund other acquisitions.

Bally’s has an extensive track record of dealmaking, including the $2.7 billion buy of Gamesys, the purchases of daily fantasy sports (DFS) firm Monkey Knife Fight (MKF) and free-to-play games provider SportCaller, and the acquisition of Bet.Works, among others.

Bally’s Could Sell Other Properties

Sources indicate that if creditors block the Rhode Island real estate transaction, Bally’s could opt to sell other venues, though specific properties weren’t mentioned.

The gaming company owns the bulk of its real estate. But it has lease agreements on the Tropicana on the Las Vegas Strip, among other venues. Gaming and Leisure Properties (NASDAQ:GLPI) is the casino landlord with which Bally’s primarily does business.

Sale-leaseback deals, or SLBs, are commonplace in the industry, and are often viewed as win-wins for casino operators and real estate companies. Through these agreements, a gaming company can monetize land assets, often garnering large, upfront sums of cash to use for anything, including more acquisitions, shareholder rewards such as buybacks and dividends, or to reduce debt.

Likewise, the real estate firm that leases the land back to the operator gets the benefit of long-term tenant agreements. Those often include gradually increasing rates without having to be financially responsible for building enhancements.