S&P alters Bally’s view to negative

S&P said it revised its outlook for Bally's Corp. to negative from stable and affirmed its B issuer rating.

Bally’s plans to sell its two Rhode Island’s casinos’ real estate for $1 billion and lease it back. It will use the proceeds for capital expenditures and growth initiatives. The city of Chicago selected Bally’s to build and run a casino in downtown Chicago, which is expected to cost at least $1.7 billion.

“Given the size of the project, we expect Bally's will generate negative discretionary cash flows while it constructs the permanent facility. Although proceeds from the Rhode Island real estate sale provide liquidity to fund a portion of the Chicago development spending, we also expect the company to incur incremental project-related debt,” S&P said in a press release.

The agency said it forecasts lease-adjusted leverage, including expected future project debt and the associated lease obligation related to the Rhode Island real estate sale, to be about 7x over the next two years. It also projects Bally’s will have negative discretionary cash flows for the next 24 months.

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