DEFA14A: Bally's Corporation Amends Merger Agreement, Introduces Class A Common Stock

Bally's Corporation amends its merger agreement with SG Parent LLC to include a new Class A Common Stock, pending stockholder approval, as part of the Rolling Share Election mechanism.

Summary

• Bally's Corporation has entered into an amendment to its merger agreement with SG Parent LLC, Queen Casino & Entertainment, Inc., and related entities.
• The amendment introduces a new Class A Common Stock, subject to stockholder approval of an amendment to the company's charter.
• If approved, the Class A Common Stock will have rights and limitations substantially identical to the existing Common Stock, except for a conversion feature.
• Holders making a Rolling Share Election will be deemed to exchange their shares for Class A Common Stock.
• The company will seek to list the Class A Common Stock on the NYSE.
• Class A Common Stock will automatically convert into Common Stock immediately before the merger's effective time or upon termination of the merger agreement.
• If stockholders don't approve the Class A Common Stock, the Rolling Share Election will proceed with existing Common Stock.
• An additional period for Rolling Share Elections may occur after the stockholder meeting if the Class A Common Stock is not approved.
• The amendment was approved by the Board and a special committee of independent directors.
• The Board recommends stockholders vote to adopt the amended merger agreement.
• Neither the Special Committee nor the Board has made any recommendation with regard to whether any stockholders of the Company should take the Rolling Share Election or retain and hold the Rolling Company Shares, has considered the terms and conditions of the Rolling Share Election or the Rolling Company Shares, or has made any recommendation with regard to or the merits of retaining an investment in the Company.

Sentiment

Score: 6

Explanation: The sentiment is neutral. The document primarily describes amendments to a merger agreement. While the merger itself could be positive, the document focuses on the technical aspects of the amendment and doesn't express strong positive or negative views.

Positives

• The introduction of Class A Common Stock could provide flexibility in managing the merger process.
• Listing the Class A Common Stock on the NYSE could provide liquidity for shareholders.
• The Board recommends stockholders vote to adopt the amended merger agreement.

Negatives

• The Class A Common Stock is contingent on stockholder approval, creating uncertainty.
• If the Class A Common Stock is not approved, an additional period for Rolling Share Elections may be required, potentially delaying the merger.

Risks

• Failure to obtain required governmental or regulatory approvals for the mergers.
• Inability of the parties to satisfy the conditions precedent and consummate the proposed mergers.
• Failure to obtain required stockholder approval in a timely manner or on the terms desired or anticipated.
• Failure of the parties to obtain the financing required to consummate the Company Merger.
• Potential disruption of management's attention from ongoing business operations due to the pending mergers.
• The outcome of any legal proceedings related to the proposed mergers.
• General risks associated with the respective businesses of the Company and Queen, including the general volatility of the capital markets, terms and employment of capital, the volatility of the Company's share price, interest rates or general economy.
• Potential adverse effects or changes to the relationships with the parties' customers, competitors, suppliers or employees or other parties resulting from the announcement, pendency or completion of the proposed Mergers.
• Unpredictability and severity of catastrophic events, including but not limited to the risks related to the effects of pandemics and global outbreaks of contagious diseases (such as the COVID-19 pandemic) and domestic or geopolitical crises, such as terrorism, military conflict (including the outbreak of hostilities between Russia and Ukraine and Israel and Hamas), war or the perception that hostilities may be imminent, political instability or civil unrest, or other conflict.

Future Outlook

The company is focused on completing the proposed transaction, subject to stockholder and regulatory approvals. The company has no obligation, and does not intend, to update any forward-looking statements after the date hereof, except as required by federal securities laws.

Management Comments

• The Board, acting upon the unanimous recommendation of the Special Committee, has recommended that the Company Stockholders vote to adopt the Amended Merger Agreement at the Company Stockholder Meeting.
• Neither the Special Committee nor the Board has made any recommendation with regard to whether any stockholders of the Company should take the Rolling Share Election or retain and hold the Rolling Company Shares, has considered the terms and conditions of the Rolling Share Election or the Rolling Company Shares, or has made any recommendation with regard to or the merits of retaining an investment in the Company.

Industry Context

Mergers and acquisitions are common in the gaming industry as companies seek to consolidate and expand their market presence. The introduction of a new class of stock is a less common but not unheard of tactic to facilitate such transactions.

Comparison to Industry Standards

• The use of a special committee of independent directors to review and approve the merger agreement is consistent with industry best practices to ensure fairness to minority shareholders.
• The level of ownership by Standard General (26.1%) is significant and gives them considerable influence over the outcome of the merger vote.
• Other comparable companies that have undergone similar transactions include Caesars Entertainment and Eldorado Resorts, where complex financial structures were used to facilitate the merger.

Stakeholder Impact

• Shareholders will be impacted by the potential issuance of Class A Common Stock and the terms of the merger.
• Employees may be affected by the potential changes resulting from the merger.
• Customers and suppliers could be impacted by any changes in the company's operations or strategy following the merger.

Next Steps

• Company Stockholders will vote on the Certificate of Amendment at the Company Stockholder Meeting.
• The Company will issue the Class A Common Stock after the Election Deadline and receipt of the Requisite Stockholder Approval.
• The Company will use commercially reasonable efforts to list any issued shares of Class A Common Stock on the NYSE.

Key Dates

Keywords

Merger Agreement, Class A Common Stock, Rolling Share Election, Bally's Corporation, SG Parent LLC, Merger