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Tropicana operators considering corporate buyout proposal

Updated March 14, 2024 - 6:42 pm

Weeks before the Tropicana is scheduled to close, the casino’s operator, Providence, Rhode Island-based Bally’s Corp., is reviewing a corporate takeover bid.

This also comes as Bally’s officials told the Nevada Gaming Control Board last week that they are faced with an $800 million shortfall to build a planned casino in Chicago. Additionally, the company is planning to develop a new resort tied to a major league baseball stadium at its Tropicana site in Las Vegas and preparing a bid for a casino in downstate New York.

A Las Vegas-based gaming analyst said this list of costly projects “may be a little bit more than they can handle at this point in time.

“It’s about execution and right now that seems to be in the balance,” said Brendan Bussmann of B Global.

Representatives of Bally’s did not respond to the Las Vegas Review-Journal’s request for a comment.

In a Securities and Exchange Commission filing Tuesday, Bally’s announced that it has formed a special committee of independent and disinterested directors authorized to evaluate a preliminary, nonbinding proposal, dated March 11, by Standard General to acquire all of the outstanding shares of Bally’s that it does not already own for $15 per share, as well as any potential strategic alternatives to the proposal.

Standard General is a New York-based hedge fund that specializes in acquiring and turning around distressed properties. It acquired the Aliante hotel-casino in North Las Vegas in 2011 and managed it through 2016 before selling it to Boyd Gaming Corp. for $380 million.

Standard General is controlled by Soo Kim, who serves as chairman of the Bally’s board of directors and owns about 23 percent of Bally’s stock.

It was the second time Standard General has made a bid for Bally’s. A year ago, Kim led an effort to acquire the company, but the Bally’s board rejected a $38-per-share bid. On Wednesday, Bally’s shares, traded on the New York Stock Exchange, closed at $13.73 a share on volume twice the daily average.

Concerns have been raised about Bally’s ability to complete construction of Chicago’s first and only casino, a $1.3 billion, 500-room project with a 3,000-seat concert venue, 10 restaurants and 4,000 gaming positions at the Tribune Freedom Center, due to break ground in the summer. Under its contract with the city of Chicago, the permanent casino must open by September 2026. A temporary casino at Chicago’s Medinah Temple opened in October.

While most of Bally’s focus is on the Chicago project, the Tropicana has been in the spotlight in Las Vegas, particularly after the Oakland Athletics recently distributed images of its planned $1.5 billion, 33,000-seat stadium at Las Vegas Boulevard and Tropicana Avenue.

In recent fourth-quarter earnings reports, both Bally’s and land owner Gaming &Leisure Properties Inc., a real estate investment trust, said they were allowing the A’s to take the lead in the stadium development before determining how a new Bally’s resort could be built around it. GLPI was waiting for the A’s next move before determining if and how much it would invest in the project.

Questions also have been raised about the A’s financial resources, which include a $380 million public contribution approved by the Nevada Legislature last year. That action is subject to potential legal action by a group determined to prioritize education over building a stadium.

The Nevada Supreme Court is scheduled to hear oral arguments April 9 in a case brought by Schools Over Stadiums, a political action committee formed by the Nevada State Education Association working to block the state’s public contribution for the stadium.

Bussmann noted that Bally’s was the biggest beneficiary of the divestiture of properties when Reno-based Eldorado Resorts Inc. successfully acquired Caesars Entertainment for $17.3 billion in 2020.

“They were able to pick up all those assets along the way. But, you know, I think looking at it with Chicago that is now a downsized project from the potential to be located in tandem with a baseball stadium in Las Vegas and still bidding in New York, it may be a little bit more than they can handle at this point in time,” he said.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.

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