July 31, 2013 - 5:03 pm
Boyd Gaming Corp. announced a stock sale Wednesday in which the casino operator will list 15 million shares of common stock, with proceeds from the sale used to pay down a portion of the company’s long-term debt.
The announcement came after the close of trading on the New York Stock Exchange and the day after the company reported better-than-expected quarterly earnings.
The move took some analysts by surprise.
Macquarie Securities gaming analyst Chad Beynon said Boyd’s stock price has grown 135 percent in the past 12 months, largely a result of operating leverage potential, the company’s online gaming opportunity in New Jersey and the $1.3 billion acquisition of Peninsula Gaming last year.
“We believe the company wants to take advantage of current valuation as well as strong momentum and reduce the leverage at the parent company,” Beynon said.
Shares of Boyd Gaming closed at $13.31 on Wednesday, up 46 cents, or 3.58 percent.
Boyd Gaming, which operates casinos in downtown Las Vegas and the Coast casinos brand, said the underwriters of the stock sale have a 30-day option to purchase an additional 2.25 million shares.
Boyd Gaming has 90.3 million shares outstanding, and the stock offering reflects 17 percent increase. The company has $4.6 billion in long-term debt.
“Although we estimate that the offering may be slightly dilutive, we believe it is important for Boyd to address its high leverage and near-term debt maturities,” RBC Capital Markets gaming analyst John Kempf told investors.
In addition to paying down debt, Boyd Gaming said it would use the proceeds from the sale for “general corporate purposes.”
Beynon speculated the company might seek other acquisitions in the regional casino market.
In addition to the Peninsula deal, which gave Boyd five casinos in three markets, the company bought the IP in Biloxi, Miss., in 2011 and sold the Dania Jai-Alai property in Florida and the Echelon site on the Strip last year.
“The regional gaming market continues to be ripe with acquisitions, and we wouldn’t be surprised to see Boyd look to diversify even further,” Beynon said.
Contact reporter Howard Stutz at hstutz@reviewjournal. com or 702-477-3871. Follow @howardstutz on Twitter.