In light of the upcoming redevelopment of Tropicana Las Vegas that would result in the creation of a baseball stadium that will be the home of the popular MLB team, Oakland Athletics, Bally’s announced recently that it held a couple of job fairs, seeking to help Tropicana workers find new employment. Acknowledging that it received “extremely positive” feedback from its employees, the company confirmed that since the start of the year, it started to gradually decrease its gaming offering as more of its employees found jobs elsewhere.
However, the redevelopment of Tropicana and Bally’s plans for new casinos in Chicago and New York, recently impacted its credit rating. On Monday this week, Moody’s Investors Service downgraded Bally’s from “B1” to “B2.” Moreover, the research firm changed the outlook for Bally’s from “stable” to “negative.” Moody’s Investors Service explained that the negative outlook is due to the company’s high leverage in combination with increased risk from upcoming planned development activities that may prolong elevated leverage levels.
“Moody’s downgrades Bally’s Corporation’s CFR to B2, outlook changed to negative. The negative outlook reflects the company’s high leverage level and elevated risk associated with its planned development activities, which could leave leverage higher for longer,“
reads a statement released by Moody’s Investors Service
Besides changing the outlook and downgrading Bally’s Corporation’s rating, Moody’s Investors Service disclosed details regarding factors that may impact those processes. It said that an upgrade in Bally’s rating is unlikely, at least for the near future. The company said it considers the gaming and entertainment operator to be “weakly positioned at the B2 Corporate Family Rating level.” Additionally, Moody’s added: “A higher rating over the longer-term is possible if Bally’s achieves and sustains debt/EBITDA below 6.5x.”
The Company Is Subject to Acquisition Bid
The announced credit downgrade comes during a busy period for Bally’s. Recently, Standard General, a company that holds a 23% stake in Bally’s, announced a proposal to acquire the outstanding stake. The bid was $15 per share, representing a 41% increase on the company’s closing share price as of March 8.
Despite the proposal, it is unclear whether the bid will be approved. A few years ago, Standard General made another bid for Bally’s. At the time, the company gathered a commission that reviewed the proposal which was rejected in the end.