On Thursday (27 February) Bally’s chair Soo Kim told the Chicago Tribune that the SEC did not declare the registration effective in time. Thus, the prospectus financials have become outdated and the development “went stale”, Kim said. It was expected to close on 7 February.
The company reportedly will now refund the deposits it had received and brainstorm a new solution. When Bally’s secured the city’s lone casino licence in 2022, it signed a host community agreement that stipulated 25% of the project equity must be owned by “minority individuals and minority owned and controlled businesses”. That would indicate that there is still a requirement to be fulfilled despite the stalled IPO.
In its prospectus filing for the IPO with the SEC, the company acknowledged the possibility of the investment programme not materialising. The filing warned that if the IPO could not proceed “the host community agreement could be terminated”.
Bally’s did not immediately respond to requests for comment regarding the status of the obligation. Its fourth-quarter earnings release and call are set for tomorrow (5 March).
“It was disappointing for the SEC to not respond,” Kim told the Tribune. “We’re going to come back. We’re going to update our financials and resubmit, but we don’t know why they didn’t respond the first time and they may not respond the second time.”
IPO was rolled out earlier this year
The rollout of the IPO programme was first announced on 30 December. It was valued at up to $250 million, split into four share classes ranging from $250 to $25,000. Shares were made available to Illinois, New York, Texas and Florida residents who qualified for minority status.
This designation applied to African-Americans, Hispanics, Asian-Americans, Native Americans or any others “found by the City of Chicago to be socially disadvantaged by having suffered racial or ethnic prejudice or cultural bias within American society”.
31 January was the cutoff date for applications. Applicants were sent a message on 28 February notifying them that they “may seek to withdraw any amount deposited”.
Discrimination lawsuit ongoing against Bally’s
While the IPO itself might be on pause, a lawsuit related to it is still ongoing. Filed on 29 January in US District Court for the Northern District of Illinois by two white Texas residents, the suit alleges that the IPO was discriminatory and unconstitutional.
The two men, Phillip Aronoff and Richard Fisher, were reportedly “ready and willing” to invest but “cannot because of their race”. A federal judge in February declined to halt the IPO with an injunction, but the suit is still active.
Loop Capital, the underwriting firm for the programme, previously said it would not verify applicants’ race or sex. But Daniel Lennington, an attorney for the two plaintiffs, told Block Club Chicago last month that Bally’s was “verifying race and sex because people who click ‘no’ are not qualified”.
Original article: https://igamingbusiness.com/finance/ballys-chicago-minority-investment-programme/
