Despite growing concerns about the company’s solvency, Bally’s Corp. has secured a $560 million loan to help it complete construction on its Bronx casino.
Private credit lender WhiteHawk Capital Partners is providing the funds. The project will use the money on pre-construction costs, with financing expected to close in the third quarter.
“This important financing allows us to progress the pre-construction planning process so that we are ready to complete the remainder of the capital raise and remain on schedule,” Bally’s Chairman of the Board Soo Kim said.
Financial Uncertainty
New York granted the license to Bally’s in December. Plans call for a $4 billion property adjacent to the Ferry Point golf course. The waterfront property will feature a 500,000-square-foot casino, 500-room hotel, spa, meeting space, a 2,000-seat event center, shopping options, and more.
The financing comes at a time when Bally’s is experiencing significant financial turmoil. The company faces $4.5 billion in debt and Executive Vice President and CFO Mira Mircheva resigned in August.
That move came after the company issued a solvency warning in its second quarter report to the Securities and Exchange Commission (SEC) in August. “The conditions and events raise substantial doubt about the company’s ability to continue as a going concern,” the filing said.
The SEC filing caused the company’s stock to fall significantly. Fitch Ratings gave the company a negative outlook, according to the Wall Street Journal.
“Leverage is not sustainable at current levels,” Fitch said.
Bally’s already had junk-rated credit. The debt load, cash-flow deficits, and financing uncertainty over ongoing projects only adds to that murkiness, the Journal reported.
Despite those concerns, management remains confident the Bronx project will reach completion.
“The additional liquidity provides us greater flexibility for other capital opportunities,” Kim said.
Bally’s Other Casino Projects
Some analysts have warned the company’s debt load could jeopardize other casino projects it’s working on.
The company recently paused construction on the hotel adjacent to a casino it is building in Chicago. Bally’s, however, said they slowed work because the city approved video gaming terminals (VGTs). VGTs are slots-like machines that are hosted by businesses, not casinos.
Bally’s claims VGTs violate its 2022 agreement with the city to build the permanent casino and amenities. Aldermen included the terminals in the budget over the objections of Mayor Brandon Johnson (D). He has also said legalizing VGTs violates the agreement.
“The potential for an uncontrolled proliferation of video gambling terminals is in breach of the city’s commitment not to expand gaming in the Host Community Agreement and creates uncertainty that could be harmful for Bally’s Chicago prospects,” the company said.
Bally’s is also working on a project in Las Vegas. The company is reportedly running behind schedule on its plans to build a casino adjacent to the future MLB stadium on the Strip.
