Last updated: April 02, 2024
Fitch Ratings downgrades Bally’s credit rating to “B” with a negative outlook, attributing it to high leverage and uncertainties regarding the Chicago development. This comes amidst struggles to secure financing and acquisition attempts by its largest shareholder. The downgrade exacerbates Bally’s challenges as it seeks to complete its Chicago project and maintain stability in its regional casino business.
In its most recent round of rating downgrades, Fitch Ratings has lowered the credit score of a regional casino group from “B+” to “B,” mainly over the increasing debt burden. This decision has induced a shift in attitude that leads to a negative assessment, which has made the existing amenability of assessment worse.
The downgrade primarily comes from high leverage leverages the group had for over a long period. Therefore, this situation will remain for a long time. In addition, Fitch has warned that such risks may be present concerning the financing and realization of the Chicago location initiative alongside forthcoming venture plans.
Bally’s advancing plans, highlighted by the $1.1 billion casino hotel in Chicago and its underperforming North American digital segment, will drag the anticipated earnings before interest, taxes, depreciation, and amortization (- EBITDA) down in the long term.
Fitch had downgraded Bally’s today the junk status of all three known major agencies that it has received in the last 60 days. So it is, as Moody’s Investors Service said last week.
As the gaming company tries to secure the $800 million in funding to finish the Chicago integrated resort, its credit rating will be further downgraded, and lenders may also demand higher interest since the Bally group’s lower credit accounts for that.
At this point, Tropicana Las Vegas, Fitch’s only house on the Strip, was intended to close. However, this may have been just a sheer coincidence. The company’s biggest shareholder, Standard General, is trying to purchase Bally for $15 per share, filed the same day the company gets a credit downgrade.
According to Fitch, the Outlook signifies that Dividette’s LTM 7x leverage must be close to the company’s downgrade threshold, which may continue during the Chicago construction phase. Further, uncertainty is factored in the Outlook that relates to SG management’s intention to buy the rest of the shares not owned yet by Bally’s.
As assessed by Fitch, Bally faces a challenge of heightened leverage in its quest for funding to finalize its Chicago establishment. The rating agency projects the company’s 2023 EBITDAR leverage to stand at 7.2x, which could escalate during the Chicago project’s progression.
Fitch anticipates this elevated leverage trend to persist in the medium term, extending until 2026, a period coinciding with the construction phase of the Chicago venture. In addition to these financial hurdles, uncertainties such as sustained high inflation further complicate Bally’s regional casino operations.
Moreover, Fitch highlights the operator’s lackluster standing in iGaming and online sports wagering sectors, suggesting these industries won’t significantly bolster Bally’s credit position in the foreseeable future.
Susan is a verified gambling support specialist who has helped thousands of problem gamblers get back on their feet through therapy and financial counseling. She’s also worked as a cage manager in four Las Vegas casinos and spent two years in Macau in her 30s, where she became extremely savvy at Sic Bo and other Asian table games. Her knowledge and expertise have and continue to play a priceless part in how we structure our content, particularly when it comes to game guides and casino reviews.
