Houston Rockets owner Tilman Fertitta’s plans to make his Golden Nugget restaurant and casino business public seem cold on Wall Street, according to The Post.
The 63-year-old casino billionaire tycoon told CNBC last month that he was looking to list a minority stake in Golden Nugget on a public stock exchange. But Wall Street people kicking the tires say the debut isn’t a blow at all because of the company’s impressive $ 4 billion in debts and falling sales.
Fertitta did not return calls for comment, but sources say her dreams on the stock market followed failed efforts to raise private funds last year.
Prior to the pandemic’s success, Fertitta had discreetly bought a 49 percent stake in the Golden Nugget franchise, which has five casinos and 600 casual restaurants, including Landry’s Seafood, Bubba Gump Shrimp, Morton’s The Steakhouse, McCormick & The butcher chains of Schmick and Del Frisco, told The Post two sources with knowledge of the situation.
There was some interest in the casino business, but not in the restaurants, as Fertitta had been looking for a multiple of more than ten times the revenue, and the restaurants even before the pandemic were not seen as a growing business, said sources.
The prospects for restaurants only worsened once the pandemic hit, which led Fertitta to look for a minority investor only in the casino’s assets. That effort also fell short, sources said.
The problem, sources said, is that there seems to be little value in Golden Nugget beyond debt, which stands at about $ 4 billion, much of 2017 to fund a $ 1.4 billion dividend on Fertitta so I could buy the Rockets for $ 2.2. billion.
Golden Nugget currently generates about $ 400 million in Ebitda, or earnings before interest, taxes, depreciation and amortization, a key financial metric. This gives it a debt-to-earnings ratio of 10 to 1, a Golden Nugget lender told The Post.
Even if profits in the next twelve months increased to $ 500 million as the pandemic waned, the business would only be worth nine times the Ebtida, which would give little value to shareholders, the lender said.
There are other concerns, such as Fertitta’s food delivery business, Waitr Holdings, which has proven to be a mistake since its blank check company bought it in 2018 for $ 308 million. At the time, the deal sent the shares to more than $ 12 per share.
But Waitr, which closed New Year’s Eve at just $ 2.78 per share, has since been dragged down by disappointing gains, as it has been lost by bigger competitors like DoorDash and Postmates.
“I don’t think public markets will accommodate it,” said a bank source who has worked on Fertitta’s fundraising efforts. “I think Waitr hurt him.”
Fertitta last week also made public the online gaming assets of its casino chain through Golden Nugget Online Gaming Inc., which has not gone well since trading began on December 30th. However, it only traded for two days and closed at 12 percent. on its second day of negotiation.
The casino mogul wants IPO money to reduce Golden Nugget’s considerable debt and make new investments, sources said. “The idea is that they wanted to diversify,” said a banker familiar with his plans.
Last year it already managed to pay about $ 300 million in dividends through Golden Nugget, sources said. It has also refinanced the company so that principal payments are not paid until October 2023.
In January 2020, Fertitta received a $ 200 million dividend from Golden Nugget, which he later returned $ 50 million to help him survive during the pandemic.
Meanwhile, Fertitta’s deal to make Golden Nugget’s online gaming business public was structured to allow it to keep $ 150 million of the $ 745 million paid by Landcadia Holdings II for blank checks to acquire it. , with the rest of the money earmarked to help complete its larger refinancing plan.
Fertitta’s troubles come during a rocky period as he owns the Rockets. According to a sports banking source, Tilman would have weighed in to reduce the payroll of the NBA team as the pandemic continues to crush ticket sales, putting him on the verge of losing $ 100 million to $ 120 million if fans they are not returning this season, according to a sports banking source.
His ties to President Trump would also have created a “revolt” between players, with NBA top scorer James Harden pushing Fertitta to change him, including the Brooklyn Nets or the Philadelphia 76ers.