Bally's Lower After Unveiling Deals, Stock Sale, Quarterly Estimate

Bally's shares tumbled after the resort and casino operator unveiled a number of deals, plans to issue shares, and an estimate of first-quarter results.
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Bally's  (BALY) - Get Report shares tumbled Tuesday after the resort and casino operator unveiled two deals, plans to issue shares, and an estimate of first-quarter results.

The Providence, R.I., company said it would buy the Tropicana Las Vegas Hotel & Casino from Gaming & Leisure Properties  (GLPI) - Get Report for about $308 million.

Bally's said it would acquire online-gaming company Gamesys JKPTF in a $2 billion deal. 

In addition, Bally's said it would issue $600 million of common stock and $250 million of equity units. The company said the proceeds would help pay for the Gamesys purchase.

Shares of Bally's at last check were 11% lower at $54. Gaming & Leisure shares were up 3.3% at $44.76.

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The Tropicana Las Vegas Hotel & Casino transaction is expected to close in early 2022. 

The purchase price for the Tropicana property's non-land assets is $150 million. Bally's agreed to lease the land underlying the Tropicana property from GLPI for an initial term of 50 years at annual rent of $10.5 million, subject to increase over time.

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Bally's and GLPI will also will enter into a sale-and-leaseback transaction relating to Bally's Black Hawk, Colorado, and Rock Island, Ill., casino properties. 

Gaming & Leisure Properties will pay Bally's $150 million in this deal. 

The lease will have initial annual fixed rent of $12 million, subject to increase over time, the companies said.

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Regarding the preliminary results, Bally's estimated first-quarter revenue at more than $185 million, while adjusted earnings before interest, taxes, depreciation and amortization exceeded $50 million. The FactSet analyst consensus called for revenue of $156.5 million.

For the year-earlier first quarter, Bally's reported adjusted Ebitda of $22.1 million on revenue of $109.1 million.

The company said that the latest results stemmed largely from "a month-to-month revenue cadence that accelerated dramatically in March as more COVID-19 restrictions were relaxed across the country." 

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"We are extremely encouraged by our trends and March numbers," President and Chief Executive George Papanier said in a statement. 

"Increased demand assisted by a relaxation of COVID-19 restrictions contributed to outstanding performance toward the end of the quarter, which, based on early indications, has continued into April."