Bally's Chicago $250 million IPO stalled at SEC; casino refunding deposits of potential minority investors
In a setback to its fundraising efforts and inclusive equity obligations to the city, the $250 million Bally's Chicago initial public offering for minority investors failed to close as planned in February after it stalled at the Securities and Exchange Commission.
Despite generating interest from thousands of minority applicants who opened and funded accounts to buy shares in the city's first casino, the SEC did not declare the IPO registration effective before the prospectus financials became outdated and 'went stale,' essentially shutting it down, the company said.
The casino is refunding those initial deposits and will go back to the drawing board to recruit women and minority participants for an updated offering, Bally's Chairman Soo Kim told the Tribune.
'It was disappointing for the SEC to not respond,' Kim said Thursday. '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.'
An SEC spokesperson said in an email Friday the federal agency does not comment on individual company filings.
Bally's Chicago opened the initial public offering last month with an investor road show and dedicated website for women and minorities to buy a 25% equity stake in the casino, looking to fulfill a minority ownership commitment to the city and raise funds for the construction of its proposed $1.7 billion entertainment complex in River West.
In May 2022, Rhode Island-based Bally's was selected to build the Chicago casino, besting finalists Rivers Casino and Hard Rock with a proposal that includes an exhibition hall, a 500-room hotel, a 3,000-seat theater, 10 restaurants and 4,000 gaming positions.
As part of the winning bid, the city required an equity component of at least 25% minority investment in the proposed casino.
The $250 million IPO featured four classes of stock ranging from $250 to $25,000 per share, enabling 'underrepresented communities' to become investors. Qualified minorities applied online through Jan. 31, opening and funding accounts to participate in the offering.
The IPO was expected to close Feb. 7.
Bally's Chicago filed an amended registration with the SEC on Feb. 12, but the IPO closing date passed without garnering the needed regulatory sign-off on the final prospectus.
Chicago-based Loop Capital Markets served as the lead placement agent for the IPO, which was limited to Blacks, Asian Americans, Hispanics and other 'socially disadvantaged' people as defined by city guidelines.
A spokesperson for Loop Capital Markets did not respond to a request for comment on the stalled offering.
Despite the IPO's failure to launch, Bally's still has a contractual obligation with the city to incorporate a 25% minority ownership stake into the Chicago casino, either through a rebooted offering or other investment vehicle.
'We want to have this community investment program offered to the everyday investors, the everyday Chicagoan,' Kim said.
A city spokesperson did not immediately respond to a request for comment Friday.
In addition to the regulatory issues at the SEC, the Bally's Chicago IPO is also navigating a federal lawsuit alleging the casino and the city discriminated against white men by limiting the offer to women and minorities.
Earlier this month, a Chicago federal judge denied a motion for an injunction to halt the IPO, but the lawsuit is ongoing.
Bally's, which has been operating out of a temporary casino at Medinah Temple since September 2023, is building its permanent facility at the 30-acre site of the former Chicago Tribune plant.
The construction project has not been without its own challenges.
Demolition had been delayed for nearly a month after a Dec. 14 mishap spilled construction debris into the adjacent Chicago River. Last month, the city gave Bally's the green light to resume razing the remaining vestiges of the Freedom Center.
Bally's began driving foundational caissons into the ground in February, with the permanent casino targeted for a September 2026 opening, the company said.
Last year, Bally's had to relocate its planned hotel tower, which was shifted from north of the casino to the south after it was determined that the caissons might damage municipal water pipes along the river.
The city approved the new site plan Jan. 23.
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