newsfilter
← Latest News
PR Newswire·

EVERBAY CAPITAL RELEASES FOLLOW-UP LETTER TO GOLDEN ENTERTAINMENT'S BOARD OF DIRECTORS, EXPRESSING SIGNIFICANT CONCERNS ABOUT THE ANNOUNCED TRANSACTIONS

GDENVICIGLPICZRMGMFLL
  • Everbay Capital LP, a shareholder of Golden Entertainment Inc. since 2021, criticizes the proposed $2.75 per share sale price for RemainCo as woefully inadequate, valuing the casino operations & tavern business at only 1.1x EBITDA.
  • Everbay views the transaction as an opportunistic move by Chairman & CEO Blake L. Sartini to acquire RemainCo at a deeply discounted price by leveraging the company's stock hitting a 4-year low two days prior to the announcement.
  • The firm argues that bundling the sale of real estate to Vici Properties Inc. with the sale of RemainCo to Sartini forces shareholders to accept an undervalued price for the operations as a condition for the real estate sale.
  • Everbay contends that selling the real estate alone without selling RemainCo would have allowed shareholders to retain a public company worth at least $12 per share, potentially yielding a total value of $42 per share compared to the current $30 deal price.
  • The letter highlights that the 1.1x EBITDA multiple is significantly lower than recent industry transactions, such as MGM's sale to Clairvest Group at a 6.6x multiple, which would imply a RemainCo value of $15.80 per share.
  • Everbay requests that the Board disclose whether a full sale process was conducted for RemainCo prior to signing the Master Transaction Agreement with Sartini.
  • The firm criticizes the one-month go-shop period as insufficient & likely to be chilled by the existence of a signed deal with the CEO, further discouraged by a termination fee where 25% is payable to Sartini.
  • Everbay urges the Board to clarify if the 62 acres of excess land are being sold to Sartini or Vici, noting that including them in the RemainCo deal would value the business at a mere 0.3x EBITDA.
  • The letter calls for the Master Transaction Agreement to be amended to require approval by a majority of unaffiliated shareholders & to eliminate the termination fee for superior proposals.
  • Everbay demands the go-shop period be extended from one month to three months & requests clarification that higher bids for RemainCo alone can constitute a superior proposal without needing to include a real estate bid.
  • The firm questions why the Board sold real estate to Vici via stock at a time when the market-implied exchange ratio was at a 4-year low, arguing this allows Vici to acquire assets at a discount.
  • Everbay cites comments from a competitor's CEO expressing jealousy of Sartini's ability to sell real estate, secure bank financing, & take the casino operations private at a low cost.
  • The letter concludes by demanding immediate disclosures on valuation rationale, timing, & the sale process, & calls for separate shareholder votes on the real estate & RemainCo transactions.