Boyd Gaming is raising $700 million in issued debt notes in order to expand its operations and potentially acquire new casinos.
After initially telling investors that the company was offering $500 million in debt notes, the casino operator upped the ante by $200 million. The premium came as a result of the company achieving a favorable six percent interest rate.
“The company intends to use the net proceeds from the notes offering in the future for working capital and general corporate purposes, which may include … expansion efforts, including acquisitions of assets or businesses, and general capital expenditures,” Boyd Gaming said in a statement.
The debt notes will be paid semiannually, and will mature in August 2026.
Investors reacted positively to the debt issuance news. The stock was up 0.5 percent on Monday, and another one percent during morning trading on Tuesday.
Boyd Gaming remains bullish on its growth outlook.
Last December, the company agreed to purchase the operations rights to four casinos owned by Pinnacle Entertainment for $575 million: Missouri’s Ameristar Kansas City and Ameristar St. Charles, and Indiana’s Belterra Casino and Belterra Park.
The four casinos are part of Penn National’s $2.8 billion agreement to acquire Pinnacle. To obtain regulatory approval ahead of the sale’s completion and ease monopoly concerns, Penn sought to unload operations in states where the company is already invested.
Just two days after agreeing to take over operations at the four aforementioned casinos, Boyd announced it was buying the Valley Forge Casino Resort in Pennsylvania for $280.5 million. And earlier this month, Boyd completed its acquisition of Illinois bar and tavern gaming operator Lattner Entertainment for $100 million.
These acquisitions will clearly position us for future growth as we strategically expand and diversify our nationwide portfolio,” Boyd CEO Keith Smith said during a Q1 conference call. “In addition, there will be new opportunities in non-traditional areas like online gaming and expanded sports betting.”
When all the deals are completed, Boyd Gaming will operate in Nevada, Louisiana, Missouri, Indiana, Illinois, Kansas, Iowa, Mississippi, and Pennsylvania.
Sports Betting Impact
The Supreme Court last month ruled 6-3 against the Professional and Amateur Sports Protection Act of 1992 (PASPA), the longstanding federal law that had prohibited sports betting in all but four states. The decision grants states the right to determine their own laws regarding the gambling activity.
Sportsbooks operating outside Nevada is expected to bring new revenue to casinos across the country.
“Regional operators Boyd Gaming and Penn National Gaming are likely the biggest beneficiaries given their smaller market caps and exposure to numerous states,” Morgan Stanley equity analyst Thomas Allen stated last month.
Delaware was the first state to join Nevada in offering full-fledged sports betting in response to the PASPA repeal. New Jersey is to become the second this week.
Pennsylvania, West Virginia, and Mississippi have all passed sports betting laws, and 15 other states have legislation introduced. Boyd Gaming is in already eight.