Golden Entertainment Slashes Debt, Announces Maiden Quarterly Dividends Amid Acquisition Rumors


Golden Entertainment, the casino giant known for its impressive Nevada operations, has made the significant move of slashing debt while simultaneously announcing its inaugural quarterly dividends. These efforts spotlight the avenue of share buybacks as the preferred method of returning capital to shareholders.

Last month was a groundbreaking time for the Strat operator. In one strategic financial swoop, Golden Entertainment deployed $287 million aimed at paying off outstanding senior notes. This masterful maneuver significantly cut the corporation’s pending liabilities to the bone. Now, the figures unveil a robust liquidity position with approximately $100 million in cash and access to a $240 million revolving credit facility.

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“Worthwhile opportunities to acquire Nevada-based casinos with owned real estate are currently scarce,” Charles Protell, Golden CFO and President, shared during the company’s first-quarter earnings conference call. “Our focus for the remainder of the year will be on acquiring our own stock which seems a more promising venture with our current repurchase authorization.”

Known primarily as a Nevada-only operator – thanks to the $260 million Rocky Gap Casino Resort sale last year – rumors persistently circle about the Las Vegas-based company’s potential acquisitions. However, the economic climate marinaded in persistent inflation and historically high-interest rates casts a shadow of doubt over industry consolidation. Such conditions have made the endeavors of company acquisition less appealing, as Protell acknowledged during his recent financial briefing.

In essence, Golden would subject itself to heightened interest rates were it to borrow capital for an acquisition in the current climate. The company has long-established a tendency of buying properties with owned real estate, a policy that spares them from new long-term commitments to landlords. Investors widely praise this cautious strategy.

Despite the high quantity of Las Vegas casinos featuring owned real estate, a vast majority are under the control of Golden’s competitors, Boyd Gaming, and Red Rock Resorts. Both these companies have not indicated any intention of selling their Sin City properties. Moreover, Red Rock has maintained a steadfast policy against selling casinos or land to other gaming companies.

That leaves Golden Entertainment in a tight spot, with fewer local Las Vegas acquisitions in sight. This fact, however, could strengthen roadways towards other objectives. Golden reigns supreme in Pahrump and competes with Caesars Entertainment for the dominant position in Laughlin – making their further shopping in these markets seemingly redundant.

Additionally, predictions about casino stocks suggest Golden need not rush into the Reno/Lake Tahoe market, a possibility previously listed by analysts. Thus far, Golden has made no move towards this speculation.

Regardless of acquisitions, Golden’s financial stamina could find solid support in buybacks, debt reduction, and dividends, the triad pillars of shareholder yield. The corporation’s pragmatic strategy seems to be paying off, making it one to watch in the gaming sector.