Full House Announces Stock Offering, Proceeds Could Be Directed to Regional Casinos

Posted on: March 24, 2021, 11:24h. 

Last updated on: March 25, 2021, 11:50h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Regional gaming operator Full House Resorts (NASDAQ:FLL) said Wednesday it’s selling common equity.

Full House
Full House Resorts’ Silver Slipper Casino. The company is selling shares to raise cash. (Image: YouTube)

The company didn’t disclose the amount of stock it’s selling — a rarity among firms using this method of capital raising. Investors’ reaction to the news was typical, as Full House shares slumped 5.24 percent in Wednesday’s after-hours session. Stocks often slide on equity sale announcements, because companies usually offer the shares at a discount to current market prices and because the transactions dilute current investors.

The proposed offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering,” according to a statement issued by the Las Vegas-based company.

Full House said the deal’s underwriters have a 30-day period in which they can offer shares equivalent to 15 percent above the offering size.

Full House Plans for Capital

Companies typically don’t specify how proceeds from debt and equity sales will be spent, except to say the funds will be directed to “general corporate purposes.”

That’s the response offered by Full House in its statement. But the operator adds the share sale will bolster its balance sheet, perhaps strengthening its effort to procure a gaming license in Waukegan, Ill. That process is competitive, as the Illinois Gaming Board (IGB) received three pitches for a gaming venue there, each of which was endorsed by the city.

For Full House stock, winning the Waukegan competition could be pivotal because some analysts see it as a significant upside driver, with one saying it could be worth close to $5 a share. The name closed at $6.68 on March 24.

News of the shares arrived a day after the company announced its new property in Cripple Creek, Colo. will be known as Charmonix Casino Hotel. That venue will be located adjacent to the operator’s existing Bronco Billy’s gaming property.

Full House said its remaining investment to complete Charmonix, which will open in the fourth quarter of 2022, is $180 million. However, that project isn’t mentioned in the equity sale statement.

Another Avenue

Full House does note proceeds from the capital raise could be directed to its Silver Slipper property in Hancock County, Miss.

“The use of proceeds could also include construction of a new hotel tower and other amenities at the Company’s Silver Slipper Casino and Hotel,” according to the company. “Certain regulatory approvals and entitlements are still required to enable such construction, and there is no certainty as to the timing or receipt of such approvals.”

In addition to Bronco Billy’s and Silver Slipper, Full House runs a pair of gaming properties in Nevada and one in Indiana.