Bally's Planned Chicago Casino At Heart Of Debt Battle With Lenders
Bally's Corp. is facing pushback from its lenders as the gaming operator aims to amend a portion of a roughly $1.9B term loan with its under-construction Chicago casino as collateral.
A group of term lenders have joined a cooperation pact to block Bally’s attempt at a loan modification, citing concerns about the value of their collateral and future paydowns, Bloomberg reported.
Bally's wants to change what property is underpinning its loan.
The casino operator is seeking approval to sell the Rhode Island property that currently backs its debt, the Twin River Lincoln Casino Resort, for $735M and then lease it back. It would designate the in-the-works Chicago casino to lenders as collateral instead.
Bally's didn't immediately respond to a request for comment.
The firm has said it will increase the interest rate on the loan and proposes to use proceeds from the Twin River sale to reduce senior secured debt, including its revolving credit and term loan. The move would cut its outstanding term loans and first-lien notes to about $1.9B from about $2.4B.
Lenders on its revolving credit facility have already agreed to the amendment, as well as a two-year extension on the maturity date, the company said in last month's statement. The agreement would push the maturity out to 2030 on at least $600M of its debt.
But its term lenders — who expressed concerns that the value of Bally’s property is declining and said they want more information on how Bally’s plans to repay its obligations and spend cash — are standing in the way.
In early July, Fitch Ratings placed Bally's and its debt on rating watch negative, citing pressure related to its sale of its international online business to Intralot, along with execution risks in the Twin River sale-leaseback.
To finance the Chicago casino, Gaming & Leisure Properties acquired the real estate at the site for $250M and is providing Bally’s with $940M for construction at an 8.5% return, Bloomberg reported last year. The REIT will own the property and lease it back to Bally's, which agreed to pay $20M in annual rent. That number could rise depending on the ultimate cost of construction.
Gaming & Leisure Properties also agreed to pay $395M for Bally's locations in Kansas City, Missouri, and Shreveport, Louisiana, to help the casino operator fund the rest of the construction cost.
Bally's Chicago casino has seen its share of setbacks as it targets an expected opening date of December 2026.
Demolition efforts hit a snag in December after debris from the site fell into the Chicago River. Construction also briefly paused in May after the Illinois Gaming Board investigated a subcontractor’s previous mob ties.
In New York, Bally's is one of three remaining contenders for three downstate casino licenses with its $4B Ferry Point project in the Bronx. The project would consist of a 500K SF gaming facility, a 500-room hotel, retail space, a 2,000-seat event center and almost 5,000 parking spaces.
Bally's paid the Trump Organization $60M to acquire the remainder of its lease for the city-owned golf course in 2023. If Bally's secures a casino license, it would result in a $115M payout to the president's family business.
