Bally’s Corporation is under fresh financial scrutiny following its latest announcement about its global online operations. Fitch Ratings has put Bally’s and its debt on “Rating Watch Negative”, hinting that the casino company might see a lower rating in the months ahead.
Bally’s Plans $3.2 Billion Deal With Intralot to Cut Debt, but Risks Remain
Bally’s announced its plan to join forces with Intralot, a Greek gaming company, by merging its international interactive division. This deal, worth $3.2 billion, will give Bally’s $1.76 billion in cash and a 60% stake in the new company. Although this move is expected to help Bally’s reduce a big chunk of its debt, Fitch still worries that the company’s debt levels will stay high even after the deal is done.
Fitch noted Bally’s high debt load, figuring its ratio of earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) to debt would remain above 10 times after the deal. The agency also pointed out the risks tied to Bally’s ongoing plans to sell and lease back its Twin River property in Rhode Island. Bally’s wants to sell the property for $735 million to Gaming and Leisure Properties Inc. (GLPI), but it needs to get approval from its lenders or refinance existing loans to close the deal.
If Bally’s cannot sell Twin River, it might struggle to fund its $1.7 billion Chicago casino project, Fitch cautioned. The company has already agreed to put up to $450 million into this development. Fitch said Bally’s current cash looks okay for now, but paying off its revolving credit facility in 2026 could be tough.
Fitch Warns Bally’s Online Struggles and Heavy Debt Pose Credit Threat
Fitch also worried about competition in Bally’s US online gambling business, which keeps losing money. The agency thinks this part of Bally’s will not help its credit standing anytime soon because online gambling is so cutthroat.
While Bally’s wide range of regional casinos in several states and its strong foothold in the UK online gaming scene were seen as stabilizing elements, Fitch stressed that Bally’s hefty debt burden and involvement in multiple complex deals create a big financial risk.
The rating review will stay in place for up to six months, given how intricate the ongoing deals are. Bally’s could dodge a downgrade if it manages to cut its debt, nail down funding for the Chicago project, and wrap up the Twin River sale-leaseback. However, if it fails to hit these marks, Bally’s could sink deeper into speculative-grade territory.