Ballys Corporation is contemplating repurchasing a portion of its outstanding shares – specifically, up to 19%. They’re employing a “modified Dutch auction,” allowing investors to tender their shares at varying prices within a predetermined band.
The rationale behind this move? Recent market volatility has led Bally’s board to conclude that their stock is currently trading below its intrinsic value. They’re prepared to pay between $19.25 and $22 per share, with the objective of repurchasing a total of $190 million worth of stock.
This buyback proposition is valid until July 22nd, 2022, subject to potential early termination or extension. The company has also indicated that this action is part of a broader strategy to return capital to shareholders, which includes a previously disclosed $350 million capital return initiative.
Intriguingly, Bally’s will defer the determination of the final share price until the conclusion of the offer period. They’ll select the lowest price within the $19.25 to $22 range that enables them to maximize the number of shares repurchased without exceeding the $190 million threshold. Consequently, all participants will receive an identical price, which may deviate from the stock’s trading price during the buyback period.
To finance this buyback, Bally’s intends to utilize its cash reserves and existing funds. Should additional liquidity be required, they have the option to borrow under their current credit facilities.
Typical General Corporation, holding a substantial 22% stake in Bally’s, is remaining tight-lipped about its intentions. They’re leaving everyone in suspense regarding whether they’ll divest their holdings if the acquisition proceeds. Bally’s executives appear to be in agreement, maintaining their flexibility.
To prevent any unexpected developments, both Typical General and Bally’s top brass have pledged to provide advance notice six working days prior to the deal’s finalization if they opt to sell. Openness is paramount in this situation.
Steering Bally’s through this intricate financial landscape is Goldman Sachs, serving as their primary consultant. Concurrently, First Capital Securities, Truist Securities, and Wells Fargo Securities are contributing as co-consultants. It’s an assembly of Wall Street’s finest.
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