Tilman Fertitta Considers to Raise Billions through IPO

Casino mogul Tilman Fertita is mulling over the option to take a substantial part of his casino and restaurant businesses public, Bloomberg reports based on unnamed sources with knowledge in the matter.

IPO Could Raise Billions

The recent rally in equity markets brought to the fore the option of going public for the Texas billionaire who has not made his mind yet as discussions are at a preliminary stage, but an initial public offering (IPO) holds the potential to raise billions if Fertitta includes a substantial number of the Golden Nugget and Landry’s properties.

Fertitta whose net worth is estimated to be around $6.4 billion, according to the Bloomberg Billionaires Index, will in any case retain control over the company by holding a stake well above 50%.

Assets owned by Tilman Fertitta’s main company, Fertitta Entertainment, will be excluded from the IPO valuation. The company owns the National Basketball Association (NBA) franchise Houston Rockets.

Golden Nugget Debt Notes Price Soar

Speculation about the IPO stirred action for Golden Nugget’s 8.75% notes due 2025, which extended gains and jumped to 104 cents on the dollar, hitting a nine-month high, as Fertitta historically relied on debt to fuel the growth of his companies, including Golden Nugget casinos and restaurant chains Bubba Gump Shrimp and Del Frisco’s.

Fertitta’s empire was seriously shaken by the ongoing health crisis related to the coronavirus outbreak and the plunge in oil prices this year. To reduce operating costs, he furloughed tens of thousands of employees and accumulated hundreds of millions of new debt paying double digits.

His measures proved successful though, as the massive cuts allowed casinos and restaurants to absorb the impact of the virus outbreak and come up with a strong performance through September 30, according to the media report. The strong results could set the stage for an IPO that would potentially allow the billionaire to raise capital by taking advantage of investor appetite for new equity offerings and pay down debt.

Merger Pending Approval

The online arm of his Golden Nugget gaming business, Golden Nugget Online Gaming (GNOG), announced in June it is going public through a merger with a special purpose acquisition company (SPAC) Landcadia Group II, owned by Fertitta and investment bank Jefferies Financial Group. The $745 million deal with the blank-check company which involves a payment made in a combination of cash and rollover equity in Landcadia, is awaiting shareholder approval.

In the meantime, GNOG continues to expand its reach by securing market access in Illinois last month, having entered into a definitive agreement with Danville Development for the development of a new casino property in Danville.