Takeover bid threatens Bally’s casino project in Chicago 

Uncertainty looms over Bally’s planned casino development along the Chicago River as high-profile investors warn against a potential takeover bid by the company’s chairman, Soo Kim. 

In a scathing letter addressed to Bally’s board, investors Dan Fetters and Edward King of K&F Growth Capital challenged Kim’s proposal to acquire the company at a “woefully undervalued” price, urging the board to reject the bid, which they believe is counter to shareholders’ best interests, Crain’s reported. 

Kim’s hedge fund, Standard General, which holds a 26 percent stake in Bally’s, in March made the offer to purchase the shares it doesn’t own and privatize the company; a special committee is reviewing the offer. 

Fetters and King argue that the proposed acquisition would undervalue the company and jeopardize its financial stability. They also want Bally’s to partner with a more experienced gambling company to ensure the successful execution of the $1.7 billion casino project, the Chicago Sun-Times reported. 

Despite Kim’s assurances that a buyout would offer shareholders immediate value, Standard General’s financial situation remains a cause for concern, as it ended last year $3.6 billion in debt. 

While K&F Growth Capital holds less than a 1 percent stake in Bally’s, the critique from prominent venture capitalists could influence larger investors to scrutinize Kim’s proposal more closely, especially considering Bally’s recent 45 percent share price decline, which they contend Kim “proposes to exploit.”

“Furthermore, it is reprehensible to use the already overstretched balance sheet of the company as a source of funds: This jeopardizes the completion of the Chicago project, putting at further risk gainful employment and tax generation in Illinois; impairs existing bondholders to the company; and diminishes the company’s capacity to invest across its casino portfolio,” the investors wrote.

Wall Street ratings agencies, including Moody’s and Fitch, have downgraded Bally’s credit, citing development and execution risks. Marcus Glover, Bally’s chief financial officer, acknowledged the need to bridge an $800 million funding gap for the Chicago project. However, challenges persist as the company navigates logistical hurdles, such as determining the location for a hotel tower on the River West site.

Despite mounting criticism, Bally’s has maintained that the recent credit downgrade will not hinder its construction plans and that the casino is still slated to open in fall 2026.

Meanwhile, the performance of Bally’s temporary casino at the historic Medinah Temple has fallen short of expectations, generating $4.3 million for Chicago’s police and firefighter pension funds since opening in September 2023, at least $9 million less than projected.

—Quinn Donoghue 

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