MANHATTAN BEACH, Calif. - K&F Growth Capital, an asset management firm and shareholder of Bally's Corporation (NYSE: BALY), has publicly recommended that the Special Committee of Bally's Board of Directors reject an acquisition proposal from Standard General, the company's largest shareholder. In a letter to the board, K&F criticized the offer as "woefully undervalued" and not in the best interest of stakeholders.
The firm highlighted the approximately 45% decline in Bally's share price over the past year and a 28% discount on its bonds, attributing these to a loss of market confidence in Bally's current strategy and financial stability. K&F Growth Capital accused Soo Kim, Chairman of Bally's and Managing Partner of Standard General, of attempting to exploit the company's weakened position by acquiring it at a price far below its potential value, using Bally's own stretched balance sheet for funding.
K&F Growth Capital's letter outlined a multi-step plan to refocus Bally's on its core strengths and improve financial stability. The proposed plan includes rejecting the acquisition proposal, refocusing management on operational discipline, monetizing non-core assets to reduce debt, eliminating risky construction projects, focusing interactive operations on casino products, and adopting a more disciplined M&A strategy.
The firm believes that by following this plan, Bally's can potentially double the value offered by Standard General's proposal and create material shareholder value. K&F Growth Capital expressed its willingness to discuss the plan in detail with Bally's management and the Special Committee and offered its assistance in implementing the proposed strategy.
The letter emphasized K&F Growth Capital's confidence in Bally's future as a public company with high-quality assets and a well-capitalized balance sheet, provided the right actions are taken to strengthen the company.
The information in this article is based on a press release statement from K&F Growth Capital.
InvestingPro Insights
In light of K&F Growth Capital's recommendations to Bally's Corporation, a closer examination of the company's financials through InvestingPro's real-time data provides a fuller picture. Bally's Market Cap stands at $557.24M, reflecting the market's current valuation of the company. Despite a challenging period, Bally's has shown an 8.57% revenue growth over the last twelve months as of Q1 2023, with a gross profit margin of 54.87%, indicating a strong potential for profitability if operational efficiencies are realized.
InvestingPro Tips suggest that Bally's operates with a significant debt burden, which aligns with K&F Growth Capital's concerns regarding the company's financial stability. The management's aggressive share buybacks and the analysts' predictions that the company will be profitable this year could signal a turning point for Bally's, provided that the right strategic measures are implemented. Notably, the stock has experienced a strong return over the last month, surging by 30.15%, which may indicate growing investor confidence in the company's prospects or a reaction to the acquisition proposal.
For investors seeking a deeper analysis, InvestingPro offers additional insights, including 9 more InvestingPro Tips for Bally's Corporation, which can be accessed at https://www.investing.com/pro/BALY. These tips could be particularly valuable for stakeholders considering the company's future amidst the acquisition discussions. To further enrich your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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