Bally’s Lender Standoff Threatens Chicago Casino Funding

Bally’s is facing a revolt from lenders over its latest debt proposal, a standoff that could ripple far beyond Wall Street — all the way to Chicago’s pension funds.

A group of creditors banded together to block the casino operator’s plan to amend roughly $1.9 billion in term loans Tuesday, Bloomberg reported, raising fresh doubts about the company’s ability to finance its long-delayed Chicago resort.

The junk-rated firm failed to win lender support by last week’s deadline, with investors uneasy about the value of the properties securing the debt and the pace of future repayments.

At the center of the dispute is Bally’s attempt to reclassify its under-construction Chicago casino as loan collateral while also seeking approval to sell and lease back its Twin River Lincoln Casino Resort in Rhode Island for $735 million.

Bally’s has said it would use about $500 million from that sale to pay down senior secured debt, including portions of its revolving credit and term loan, trimming first-lien obligations to about $1.94 billion.

But creditors want more detail on how the company intends to manage cash and repay debt after recent repayments to Apollo Global Management — a move that raised eyebrows among some investors.

The dissenting lenders, advised by Akin Gump Strauss Hauer & Feld, have questioned the declining value of the company’s property collateral and are pressing for new guarantees tied to Bally’s 58 percent stake in Greek gaming company Intralot, acquired through a deal completed earlier this month.

The stalemate is a critical obstacle to Bally’s push to extend at least $600 million in term-loan maturities to 2030. Lenders on its revolving facility have already agreed to the extension, arranged by Deutsche Bank, but the broader amendment remains in limbo. Bally’s term loan slid to about 90 cents on the dollar this week, down from 95 on Friday, reflecting mounting investor anxiety.

For Chicago, the timing couldn’t be worse. The city is counting on the long-promised Bally’s casino — approved in 2022 and expected to generate hundreds of millions for its underfunded pension systems — to advance beyond its temporary River North site.

Bally’s insists its balance sheet is “fantastic,” citing more than $1 billion in cash and credit access. Unless the stalemate breaks, the company’s financing gamble could leave Chicago’s casino dreams on hold.

— Eric Weilbacher