Hedge fund Standard General has made an offer to buy gambling Bally’s Corporation for $15 per share, equating to a company valuation of $648 million. Standard General is already the largest Bally’s shareholder, owning 23% of the company. Monday’s offer was a substantial 41% premium over Bally’s share price at Friday’s close.

The offer is also substantially lower than one Standard General made in 2022, when it bid $38 per share for Bally’s.

“For whatever reason, the shares have not traded well,” Soo Kim, Standard General’s founding partner, told the Chicago Tribune. “There’s nothing more that we can do, other than speak through action, and our action is to multiply down on our commitment to this company and buy shares at a healthy premium to current shareholders.”

Mr. Kim is also Bally’s Chairman of the Board, so he has a keen insight into both sides of this potential deal.

Bally’s plans to break ground this summer on a new Chicago casino, the financing for which seems to have had to do with the stock price decline. Its proposed budget for the casino is $1.74 billion, but at the end of 2022 Q4, the company had just $163 million in cash and $3.6 billion in debt. It still has $1.1 billion in remaining costs to build the Chicago casino and is still trying to raise $800 million.

Lance Vitanza, Senior Analyst for TD Cowen’s equity research group, said on Tuesday that, “Investors are making a mountain out of a financing molehill” and that he believes there is plenty of time for Bally’s to get the money it needs.

Kim said that concern about Bally’s finances is just “a lot of noise.”

That said, it hasn’t been the smoothest of rides for Bally’s in Chicago. Its plans for the property are massive: a 500-room hotel, ten restaurants, a 3,000-seat theater, 4,000 gaming positions, and an exhibition hall. In January, though, the company found out that it was going to have to relocate the hotel (fortunately, construction has yet to begin) because it would have damaged city water pipes near the Chicago River.

While the casino entertainment complex is under construction, Bally’s has set up a temporary casino at the Medinah Temple, which the company spent $50 million to renovate.

Bally’s has formed a special of “committee independent and disinterested directors” to evaluate the offer. Vitanza believes they might go back to Kim to try to get the price closer to $20.

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