Shining a light on Golden Entertainment's "wealth transfer" $GDEN
Summary
Golden Entertainment (GDEN) Take-Private: The episode centers on GDEN’s proposed sale-leaseback plus management-led take-private, described as a dramatic wealth transfer from minority shareholders to insiders.
Sale-Leaseback with VICI (VICI): VICI will acquire GDEN’s real estate and receive $87M in annual rent, while GDEN shareholders get ~0.9 VICI shares; key rent terms were only disclosed in VICI’s press release.
Valuation Discrepancy: After rent, GDEN’s opco is estimated at ~$70M EBITDA (2024 ~$155M EBITDA minus $87M rent), which at 5.5x implies ~$376M (~$14/share) versus management’s $2.75/share bid, a ~$300M shortfall to minorities.
Casinos & Gaming Context: Management previously highlighted the attractiveness of Nevada-based assets and sale-leaseback value, backed by share buybacks near $30, then removed presentations and call archives from the IR site.
Process & Regulatory Risks: Go-shops in regulated gaming are fraught due to licensing and management influence; any go-shop should be transparent, with VICI’s sale-leaseback terms portable to competing bidders.
Shareholder Action Plan: Push for separate votes on the sale-leaseback and the opco purchase, enabling acceptance of the real estate monetization while rejecting an undervalued opco take-private.
Overall Perspective: Sale-leasebacks are valid value-creation tools, but the opco pricing is deemed egregiously low; restructuring could preserve upside for GDEN shareholders while allowing management participation at a fair price.
Transcript
All right. On today's episode of the yet another value podcast, I have a different episode, a special episode. Every now and then there is something in the stock market, a stock specific that I think an interesting situation that my hope is that shining some sunlight on it using my very small niche platform to shine some sunlight on that can create a better situation for all shareholders. So today I'm going to be talking about Golden Entertainment. The ticker there is GDN. I am long just not investing advice. See the full disclaimer I talked about at the beginning. I talk about it then show see the full disclaimer all that sort of stuff but I'm going to dive into they recently announced a deal at a big premium that I think is a despite the big premium I think it is a dramatic wealth transfer from minority shareholders to insiders in this take private. I'm going to go through all of the reasons why I think it's a dramatic take private and all of the reasons why I think as engaged shareholders who are not looking to form a group. But as engaged shareholders, if you're looking at the situation involved, you should be reaching out and saying this is insane. This is a wealth transfer from me, a minority shareholder, to the management team. This deal needs to be restructured, split in a hundred different ways. And if we do that, we can get to a fair outcome for all shareholders. So, I'm going to detail all that and we're going to get there. But first, a word from our sponsors. Today's podcast is sponsored by AlphaSense. Look, you know AlphaSense as a longtime sponsor of this pro podcast. I love all their tools, their virgin AI tools. I love their expert networks and I increasingly love their webinars. Uh they are sponsored this podcast. The next webinar they have coming up is P distributions. Is the drought finally over? They're going to be talking about go on Twitter, go look. Everyone's talking about hey uh you know the IRS are they real? Where's the cash? Where's all this sort of stuff? So they've got a great set of speakers who are coming on and talking about all those things. Hey, if they open up P and alternatives to investors, what is that to retail investors? What does that look like? They've got a great set of speakers. It's Ted Citiz from Capital Allocators and Xavier Smith, the director of ENI research, AlphaSense. It's launching November 18th. There'll be a link to the sign up in the show notes and on the blog. You can sign up there. And thank you to Alpha Sense for sponsoring this episode. All right. Hello and welcome to the yet another value podcast. I'm your host Andrew Walker. Today I am doing a one of a rare, not unheard of, but a rare solo episode. And this is because there's a specific situation in a specific stock that I want to, you know, as I like to say, sunshine is the best disinfectant. I didn't come up with that. I wish I did. I wish I was that smart. Sunshine's the best disinfectant. So, I want to use my small niche platform to sign shine some sunlight on a deal that I think needs some sunshine on it. So, uh, if you've listened to a solo episode before, you know most of my podcasts I have a guest on. don't use any visual aids because a lot of people listen solo episodes. You know what? I I might need a little help. So, I will use visual aids. If you want to see the visual aids, I'd encourage you to uh go over to the YouTubes and see the see the video. Uh I'm going to share my screen in a second. I'll try to walk everything through, but again, if you want the visual aids, please go see that. So, with all of that out the way, I'm going to hit screen share on my presentation and we're going to dive into it. So, the company I want to talk about is Golden Entertainment. The ticker there is GDEN. I'm going to disclaim multiple times I am long. We'll go to a disclaimer side in a second, but the the title of this presentation is stopping a $300 million wealth transfer. And I'm going to put wealth transfer in quotes. So, let's dive into it. We'll we'll start off with Oh man, of course the presentation doesn't work as I'm flipping through. So, we're going to start off with a quick disclaimer. Look, I am long the stock. I want to shine some sunlight on this process. As I've said multiple times, nothing on this podcast is investing advice. That's always true, particularly true today. Full disclaimer at the end of the podcast. If you're watching visually, we've got a big disclaimer up here. You can go see in the link in every show notes, I include a link to the yet another volume blog disclaimer. You can go see it there. So, there's my disclaimers. Uh, and again, I'm biased. I would like this this process to result in a higher bid. So, let's dive into it. And to dive into it, I want to start and back up. There was in October, there was a theft from the Lou. About hund00 million worth of jewels were stolen. And this theft captured the imagination of the world. I don't think it's unfair to say. You know, stories were run. I've got a screenshot here of just the Google AI. There's AP News, NBC News, New York Times. You go into media, uh, SNL, weekend update, Bowen Yang comes out as George Santos and reveals he did something with her valu. I've got a screenshot of that. Jesse Eisenberg was going around and joking that now you see me three, the lof heist was a promotion for it. So pe comedians are joking about it. Everyone knows about the heist at the lof. Why do I mention that? Because the Lou Heist pales in comparison to the legal the fully legal wealth transfer that is happening at Golden Entertainment. If the deal that they announced last week to do the sale, lease back, take private goes through, I believe it will result in a wealth transfer of $300 million, that's three times the value of the Louise. It will result in a wealth transfer that from minority outside shareholders to management. And I'm going to break all that down in a second, but let me back up a sec. You know, in any heist, the Lou heist, in any thriller, I'm a big reader. I love to read mysteries. I love to read thrillers. You read any thriller and at the end there's going to be a smoking gun. And a smoking gun, the history there is actually interesting. It dates back to the 1800s. Obviously, you needed guns for there to be smoking guns. Uh I I think it kind of gets popular when it's not a smoking gun. It's actually a smoking pistol in a Sherlock Holm story is used. A smoking gun is the strongest of circumstantial evidence you could have. You know, direct evidence would be I see Mary shoots Jane and I go testify as a witness. That is direct evidence. Circumstantial evidence, you don't have direct evidence. You don't have someone who saw the person shoot someone, but you know that you're looking for a suspect and the suspect holds a gun that is smoking and you can use that to kind of put two and two together. Now, you could never kind of definitively say it because maybe you found someone with a smoking gun and you thought they shot the person, but you know, they had fired the gun up into the air or you think Mary shot Jane, but it turns out that Todd over there shot Jane and then handed Mary the gun and ran away for some reason, right? So, you never use it, but a smoking gun is the strongest of circumstantial evidence. And I I believe the most famous smoking gun would be the Nixon uh tapes. In the Watergate scandal in the 70s, there was the smoking gun tape that is Nixon discussed a cover up if I remember correctly. So that's [snorts] the history of a smoking gun. Why did I mention that? Again, any theft, any wealth transfer needs a great smoking gun. Any story needs a great smoking gun. And I think there's a smoking gun at Golden Entertainment that reveals that management team knows exactly how much money is getting transferred to them here. And what is that smoking gun? If you are looking on the YouTube, I have a screenshot. This is what Golden Entertainment's IR website used to look like. This is from the Way Back Machine. This is from April 15th of 2025 on the Way Back Machine. I can tell you that I was looking at Golden Entertainment's uh IR website as recently as uh what was it? Thursday, November 6th was as recently I was I was looking at it and it looked exactly like this. And if you're looking there are seven boxes here. As of Friday, the IR website looked a little different. Here's what the IR website looked like on Friday, and I'm recording this Sunday, November 9th. Here's what it looks like right now as I'm recording it. You'll see on the screen there are five boxes. What are the two boxes that are missing? Where have we gone from 7 to 5? Well, we've dropped off the presentations box and the conference call box. Now, that's kind of weird. Why would a management team decide to change an IR website? Uh, especially an IR website. I mean, again, the wayback machine said it looked like this in April. I telling you, I saw it on Thursday. It look like this on Thursday to my memory. Why would they choose to change this on Friday? Why would they drop off the presentations and conference calls website? Glad you asked. Well, the presentations they used to publish a IR presentation once every 3 months and it would walk through here's our properties, here's our value. Perhaps they didn't want this IR presentation out because one of the things the IR presentation talked about was hey here's why we think our gaming markets and our assets are so attractive. You know, a lot many of their assets are in Nevada. Nevada is one of the largest and fastest growing, richest places in the uh United States. It's a really attractive market. We think our assets are really attractively positioned. Perhaps that's why they took this out. Or perhaps it's because the Golden Entertainment deal to go private is getting structured in a two-part deal. There's a sale lease back to Vichi and then there is the take private of the OPCO. I'll talk about that in a second, but they used to publish in their slides. They would say, "Hey, here's what it would look like if we did a sale lease back of all this real estate we we own." And they would say, "Hey, if we did a sale lease back, you are creating a sale lease back. Our real estate assets would cover the entire value of our stock price and you'd be creating the opco for free." And not only would they give you slides that said this, management would talk about this all the time. And I've got a quote up here from their Q324 deck where the CEO comes out and says, "Look, in our deck, we provide some math around the value of our real estate and how that may drive value certainty in our share price." Given that our math shows our opco is really free if you buy our shares and they're buying back sh they're look, it's not just words and images that they are saying, "Hey, our stock is cheap." They are backing this up with action. They are buying back shares at around $30, under $30 per share constantly. And this action is not light action. The management team here owns a lot of stock. Uh the management team who will be taking them private owns about 25 plus% of the stock. So if they're buying back the stock, it's because they believe that their remaining shareholdings will be increasing value significantly. They believe what they're pitching. So that is my smoking gun evidence. They take all of the times they've talked about, all the presentations they've done that show, that highlight this value, that highlight this real estate value, that highlight the OPC code is getting created for free, they take it all down. So why do they take it all down? Let's break that down. Again, the deal is structured into two components. VG Properties will do a sale lease back of the real estate under seven of Golden's casinos. Uh, and in return, they will take Golden has some debt. Vichi will pay down Golden's four, let's call it 425 million of debt. They'll assume and pay that down and Vichi will also give each of Golden shareholders about 0.9 shares of Vichy common stock which is worth about 27.25 per golden share. Right? So that's one side of the transaction. Shareholders get cash out $2725 per share. The other side of the transaction is the management team will buy the remaining operating assets. Those casinos, the local taverns that Golden Owns, they will buy that for $2.75 per share. Those are the two sizes of transaction. You combine that together, you get the roughly $30 per share. That is the headline value that Golden is talking about when they say, "Hey, we're getting taken out for this big premium." Right? Let's break that down. So this I again sale lease backs are not uncommon in in uh in casinos. They're not uncommon in real estate. A casino owns all this real estate. The real estate it sits there. They say, "Hey, I I need to pull a financing lever. Sale lease back is not uncommon. Golden has been highlighting this for 18 months that they could do it and create a lot of value, pull that lever if they wanted to." Interesting. The sale lease back terms were not disclosed in the Golden press release. You have to go to the Vichy press release where they say hey we're doing this to find the sale lease back terms and see that hey Vichy Golden will the Golden OPCO will be tra pay paying Vichi $87 million per year in rent. It's kind of weird. Why would they not disclose that? Well perhaps they didn't want shareholders to be able to do the math. Golden again in 2024 they own all of this real estate, right? So they're not paying rent but their IBIDA is 155 million in 2024. If we do it on an LTM basis, Vegas has been a little soft. They would uh it would be uh about 10 millions below 145 million. But just to make it easy because I'm doing the screenshot, let's use 155 million. So they're doing 155 million in IBIDA. We'll have to take $87 million of rent away from that because now previously they own the casinos now be paying rent. So 155 minus 87 is the opco Ibida comes out to if I'm doing the math right in my head about $70 million in IBIDA right interesting well keep that number in your head for a second what is that $70 million of IBIDA worth? humorously, Ever Bay Capital, I've never talked to them, don't know who they are, never talked to them. Ever Capital published a letter that came out on November 6th. Uh, you know, literally 15 minutes after the take private deal was announced, Ever Capital published this letter saying, "Hey, Golden, I think you should pursue a sale lease bank. I think you should pursue it." And here's what my our value math says. Uh, they published this letter. So, I don't know if they saw the deal and pressed it, but it does not mention the deal. It just mentioned the value creation opportunity. And everybody thought that this uh the remain the opco could do $50 million per year in IBIDA. Again, I've got it at 70 million on kind of the 2024 numbers, but we can split hairs. You can change the numbers all you want. They thought it' do 50 million and be worth a modest and they call it, this is their quote, modest uh 5.5x multiple. So if we apply that 5.5x multiple to the roughly 70 million in ibida that I was talking about everybody thinks that this company would be worth 376 the opco after the rent expense would be worth $376 million in value. Uh golden has just over 27 million 27 million shares outstanding. So that would imply that OKCO is worth just shy of $14 per share. If you use my 70 millionish of Ibida and you use the Everbay 5.5x multiple and again you can do the math on your own. You can change, you can say, "Hey, earnings have been a little weak so far this year. Let's use 60. Let's use 50." Whatever. That's fine. You can use those numbers. You've got the numbers. You can change them all. However, if you'll go back to the deal as I present it to you, management is buying this opco. This opco that on my numbers is doing 70 million per year in management is buying that opco for $2.75 per share. Multiply that by 27 million shares outstanding. management is buying the opco for $75 million. They are buying the opco for on my math one times evida. If they're buying it for $75 million and I'm using the ever bay multiple and at 5.5x it's worth $376 million that is $300 million of wealth that is being transferred from minority shareholders to management on this opco deal. So what's the solution here? I I mean I think look I've given you the smoking gun. I've given you the math. You can change it all around however you want. This opco business is not worth one times. There's not a world where this opcoode business is worth one times. I follow lots of gaming companies. I follow there. None of the you can debate if it's four times. You can debate if it's six. You can debate if it's eight. You can debate if the right number is 50 million, 60 million, 70 million, whatever you want. There's not a world where this Aco is worth $75 million per share. $75 million. There's not a world where it is worth $2.75 per share. That valuation is management stealing money. Stealing, sorry, I I'm not accusing. This is a legal wealth transfer. They are legally taking that money from shareholders and transferring it to themselves with this deal. I I'll give you one more op codes like this. And I believe everybody mentions this in the letter, but again, I follow these. You can lever these up two and a half, three times very easily. the the management team here could do this deal cash out shareholders at onetimesish ibida and relever the company and they could take out a dividend if they're buying it for $75 million there's a world where they pay minority shareholders $75 million and actually they own 25% so they pay 50 but they're paying $75 million they're valuing the opco for $75 million they could do a dividend recap and take this two two and a halfish times leverage take out a 150 million dividend take 150 million minus 75 million they would be left with $75 million of cash plus control of Vakco. So they would get all the cash. They'd double their valuation instantly and have control of Vako. This is a wealth transfer on the highest [snorts] order. What's the solution here? Let's talk about solutions. I have no again there are two terms. There are two sides of this deal. There's the sale lease back and there's the opco take private. I have no problem with the sale lease back. That is a nifty piece of financial engineering that accelerates value realization. We that's fine. The issue is with the valuation of the opco and the opco private. So there are several things they could do. Number one, there's a go shop here. They could run a full and fair go shop. That's great. I love go shops. However, I will tell you that go shops when a management team is taking a company private are rife with conflicts of interest. Why do I say that? Well, the management team's preparing the numbers. The management team's talking to the biders. the management team can I mean I know if somebody makes me do something I don't want to do I'm kind of ory I don't want to answer their calls I'm lazy I'm sloppy in responding to them I respond to them short management teams can do all that they can publish sandbag numbers they can do all sorts of stuff that's always true but it's particularly true in a regulated industry like gaming because you need gaming licenses and the management team can talk to the regulator and say hey I uh the management team can talk to the reg I'm going to pause this for one second Sorry about that. So, my wife I I've mentioned this on the podcast before. She's nine months pregnant. I got five phone calls from her. I was like, "Oh my god, I need to end this pitch half [laughter] towards the end because I'm going to the hospital." But no, she was just uh her and the baby were visiting to say hello. So, I will try. I have lost my train of thought. I'm going to hop back into it. But if this is crazy, that that's why. So, anyway, I believe I was talking about the go shop and why they don't work. And and the reason it's difficult I mean I love again I love go shops but it's difficult because if it's a management take private management can actively dissuade biders they cannot be super cooperative but the other thing is this is a regulated industry these are casinos there are gaming regulators and management can go to the gaming regulators and the gaming regulators can let any the management they probably have good relationship with the regulators they can say hey regulators let why don't you let unfriendly biders know that they're they're kind of not welcome here right we're we're the people you want to work with we don't want to transfer the license you So very very tough situation for a go shop to work. Go shops are always difficult because people are starting behind the eightball. They have to ramp up. There's already a price in place all this structure all this. But I think it's really difficult with a management state private in a regulated industry with licensed transfers like gaming. So there is a g go shop but here's what I would propose. A the go shop needs to be done in a full fully fair and transparent way. Oh other issue with the go shop here. The go shop needs to be done in such a way that any bidder can bid on the opco and inherit the vichy deal. Right? Because if you put golden up for sale, you say, "Hey, the whole casino's for sale." Well, you've got the sale le is somebody's coming up and they have to go enter a new sale lease back. They have to find all this. People should be able to bid just on the oco if they want. We need to maximize value for shareholders here. So, what I would propose is the go shop needs to be want run in a, you know, the the the classic cliche, a fully fair and transparent way. But what that means is uh biders need to be insured that the company's not going to have regulators lean against anyone. Management needs to say, "Hey, look, we want to take this company private, but if a bidder is coming and they want to offer minority shareholders $5 per share instead of 275 per share, 750 per share instead of 275 per share, [snorts] we can roll our equity with them or we can not roll our equity with them, whatever they would prefer. They can get the same treatment that we're treating. And obviously the vich sale lease back needs to be portable with every shareholder. Here's other things I I I think needs to happen. Hey, just I'll flat out say it again. This is a $300 million wealth transfer from minority shareholders to the management team. If this deal goes through at one time it is an absolutely insane price. It just needs to be bumped. They come out and they say, "Hey, the go shop failed." Then I say, "Cool. We still need the deal to be bumped. This there were so many issues with goshop. This still needs to be bumped. It is a huge wealth transfer." See, there is no reason there when the process comes out. And again, the deal was announced almost 48 hours ago, right? It was announced on Thursday. I'm recording this on Sunday. We haven't seen a lot of things. We haven't seen the price. We haven't seen anything. Shareholders need the ability to vote on these two deals separately, right? There's no reason. I'm pretty sure when the price comes out, it's going to say, "Hey, do you want $30 per share? Actually, 270 per share in cash plus the Vichy stock. Do you want that or do you want no deal?" There is a third choice. The sale lease back as management has noted numerous times in those presentations that I was showing you earlier. The sale lease back can be done independently of the op code going private. Shareholders need the ability to vote on both sets of transactions. Do you want the sale lease back that gets us, you know, 0.9 shares of stockish plus pays down all the debt the company. Do you want that? Do you want the op code private or do you want both? We should be able to vote on that separately because to me I'm completely fine taking the sale lease back and then having this OPCO company with no net debt that does 50 60 70 million per year in Ebidoth as a standalone stub trade. I'm completely fine with that. And guess what? Many of the things that this management is taking them private. They could do everything that they're thinking about they could do it in the public shell. There's no reason this has to go private except to transfer wealth to management team. Now, if they want to pay a fair price, that's fine. But you could leave this as a subco and then you could do the relever transaction I had talked about and you could probably pay a $5 per share dividend to everyone. So, I think that we should be able to vote on this separately. I think the gosh shock needs to be really implemented in a full full and fair way. And short of that, I think the OPCO deal needs to get bumped any which way. So, I think I have rambled quite a bit. again my wife called and I lost my train of thought here but this is I have been doing this for 10 15 years I don't know I can't really think of a more egregious transaction that I have seen and yeah I just I I can think of a few egregious transactions but the way this is being structured where you say hey the headline price the premium it paid is what you focus on but all of that premium is coming from the sale lease and management is effectively being able to take control of the opco for a song. I I just I can't think of many things more egregious. I I mean it will be such an enormous transfer of wealth to the management team if they are able to do this at the at the same time. So what are the solutions here? I I went through go shop needs to be run failure split the vote. What are the solutions for minority shareholders? And look, I will say I'm not trying to form a growth. I I I group with anyone. I've disclosed we're long the stock. Obviously, I'm talking my own literal book here, right? But I I'm a big believer in shareholder governance. And I I think the thing that shareholders can do is you can reach out to the Golden Entertainment team and you can say, "Hey, this is insane. Forget Andrew's math. Andrew's math, he doesn't he doesn't know anything. I wasn't a math major. He doesn't know anything. Here's my math on the numbers." And again, I I present a lot. The Ebidot number I gave you, the 155 million, that's the 2024 Ebidot number. The sale lease back rent, that's from the Vich press release. So, you can do your own math. It's not going to come out too different than mine, but you can do your own math. But you can say, "Here's my math. Here's the value I'm seeing. Management needs to pay a fair price for this. We are going to vote against this transaction. If you don't, we're going to hold management fee. We're going to hold the board's fee to the fire." All of these things need to be communicated to the company. And the company has to know, look, I I I think by taking the presentation downs and by taking the conference calls down, they were showing you that they knew there was some vulnerability. They knew that if you kind of dug deep enough, you would find the smoking gun in the conference calls. didn't take much digging, right? I knew this. I've been following the company for years. I I I instantly knew, but I I think they relied on, hey, people won't dig. And by the way, that the big headline premium, maybe we'll just take the big headline premium. But no, the answer the headline premium comes from the sale of these back. They've been touting that for years. That lever was always available then. It's available as a public company. It's available as a private company. These need to be separated and voted on separately. Shareholders need to communicate to that. And if that happens, if the sunlight comes out, if the smoking gun, if they are held accountable for that, I think that there is a transaction structure that can see the management team do well, the management team take private here, but that can see shareholders get much more and much fairer value for their stock. So, I'm going to wrap it up here. Again, I apologize. My wife hit me with the five times call and I I I thought it might be so maybe I got a little disin, but I I I've never seen I don't think I've ever seen a transaction quite this egregious. It is just insane to me that they could do this. It's ballsy. It reminds me of the loop heist except in a fully legal and a fully legal, not transparent, but a fully legal way. And I am hopeful that by shining some sunlight on the process, I can help kind of get fair value for everyone. So, I will wrap it up there. Uh, thank you for listening. Thank you for listening to me ramble. There's going to be a disclaimer at the end. So, remember, not investing advice. I'm long the stock, all that sort of stuff. But, we'll wrap it up there. A quick disclaimer, nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial adviser. Thanks.
Shining a light on Golden Entertainment's "wealth transfer" $GDEN
Summary
Transcript
All right. On today's episode of the yet another value podcast, I have a different episode, a special episode. Every now and then there is something in the stock market, a stock specific that I think an interesting situation that my hope is that shining some sunlight on it using my very small niche platform to shine some sunlight on that can create a better situation for all shareholders. So today I'm going to be talking about Golden Entertainment. The ticker there is GDN. I am long just not investing advice. See the full disclaimer I talked about at the beginning. I talk about it then show see the full disclaimer all that sort of stuff but I'm going to dive into they recently announced a deal at a big premium that I think is a despite the big premium I think it is a dramatic wealth transfer from minority shareholders to insiders in this take private. I'm going to go through all of the reasons why I think it's a dramatic take private and all of the reasons why I think as engaged shareholders who are not looking to form a group. But as engaged shareholders, if you're looking at the situation involved, you should be reaching out and saying this is insane. This is a wealth transfer from me, a minority shareholder, to the management team. This deal needs to be restructured, split in a hundred different ways. And if we do that, we can get to a fair outcome for all shareholders. So, I'm going to detail all that and we're going to get there. But first, a word from our sponsors. Today's podcast is sponsored by AlphaSense. Look, you know AlphaSense as a longtime sponsor of this pro podcast. I love all their tools, their virgin AI tools. I love their expert networks and I increasingly love their webinars. Uh they are sponsored this podcast. The next webinar they have coming up is P distributions. Is the drought finally over? They're going to be talking about go on Twitter, go look. Everyone's talking about hey uh you know the IRS are they real? Where's the cash? Where's all this sort of stuff? So they've got a great set of speakers who are coming on and talking about all those things. Hey, if they open up P and alternatives to investors, what is that to retail investors? What does that look like? They've got a great set of speakers. It's Ted Citiz from Capital Allocators and Xavier Smith, the director of ENI research, AlphaSense. It's launching November 18th. There'll be a link to the sign up in the show notes and on the blog. You can sign up there. And thank you to Alpha Sense for sponsoring this episode. All right. Hello and welcome to the yet another value podcast. I'm your host Andrew Walker. Today I am doing a one of a rare, not unheard of, but a rare solo episode. And this is because there's a specific situation in a specific stock that I want to, you know, as I like to say, sunshine is the best disinfectant. I didn't come up with that. I wish I did. I wish I was that smart. Sunshine's the best disinfectant. So, I want to use my small niche platform to sign shine some sunlight on a deal that I think needs some sunshine on it. So, uh, if you've listened to a solo episode before, you know most of my podcasts I have a guest on. don't use any visual aids because a lot of people listen solo episodes. You know what? I I might need a little help. So, I will use visual aids. If you want to see the visual aids, I'd encourage you to uh go over to the YouTubes and see the see the video. Uh I'm going to share my screen in a second. I'll try to walk everything through, but again, if you want the visual aids, please go see that. So, with all of that out the way, I'm going to hit screen share on my presentation and we're going to dive into it. So, the company I want to talk about is Golden Entertainment. The ticker there is GDEN. I'm going to disclaim multiple times I am long. We'll go to a disclaimer side in a second, but the the title of this presentation is stopping a $300 million wealth transfer. And I'm going to put wealth transfer in quotes. So, let's dive into it. We'll we'll start off with Oh man, of course the presentation doesn't work as I'm flipping through. So, we're going to start off with a quick disclaimer. Look, I am long the stock. I want to shine some sunlight on this process. As I've said multiple times, nothing on this podcast is investing advice. That's always true, particularly true today. Full disclaimer at the end of the podcast. If you're watching visually, we've got a big disclaimer up here. You can go see in the link in every show notes, I include a link to the yet another volume blog disclaimer. You can go see it there. So, there's my disclaimers. Uh, and again, I'm biased. I would like this this process to result in a higher bid. So, let's dive into it. And to dive into it, I want to start and back up. There was in October, there was a theft from the Lou. About hund00 million worth of jewels were stolen. And this theft captured the imagination of the world. I don't think it's unfair to say. You know, stories were run. I've got a screenshot here of just the Google AI. There's AP News, NBC News, New York Times. You go into media, uh, SNL, weekend update, Bowen Yang comes out as George Santos and reveals he did something with her valu. I've got a screenshot of that. Jesse Eisenberg was going around and joking that now you see me three, the lof heist was a promotion for it. So pe comedians are joking about it. Everyone knows about the heist at the lof. Why do I mention that? Because the Lou Heist pales in comparison to the legal the fully legal wealth transfer that is happening at Golden Entertainment. If the deal that they announced last week to do the sale, lease back, take private goes through, I believe it will result in a wealth transfer of $300 million, that's three times the value of the Louise. It will result in a wealth transfer that from minority outside shareholders to management. And I'm going to break all that down in a second, but let me back up a sec. You know, in any heist, the Lou heist, in any thriller, I'm a big reader. I love to read mysteries. I love to read thrillers. You read any thriller and at the end there's going to be a smoking gun. And a smoking gun, the history there is actually interesting. It dates back to the 1800s. Obviously, you needed guns for there to be smoking guns. Uh I I think it kind of gets popular when it's not a smoking gun. It's actually a smoking pistol in a Sherlock Holm story is used. A smoking gun is the strongest of circumstantial evidence you could have. You know, direct evidence would be I see Mary shoots Jane and I go testify as a witness. That is direct evidence. Circumstantial evidence, you don't have direct evidence. You don't have someone who saw the person shoot someone, but you know that you're looking for a suspect and the suspect holds a gun that is smoking and you can use that to kind of put two and two together. Now, you could never kind of definitively say it because maybe you found someone with a smoking gun and you thought they shot the person, but you know, they had fired the gun up into the air or you think Mary shot Jane, but it turns out that Todd over there shot Jane and then handed Mary the gun and ran away for some reason, right? So, you never use it, but a smoking gun is the strongest of circumstantial evidence. And I I believe the most famous smoking gun would be the Nixon uh tapes. In the Watergate scandal in the 70s, there was the smoking gun tape that is Nixon discussed a cover up if I remember correctly. So that's [snorts] the history of a smoking gun. Why did I mention that? Again, any theft, any wealth transfer needs a great smoking gun. Any story needs a great smoking gun. And I think there's a smoking gun at Golden Entertainment that reveals that management team knows exactly how much money is getting transferred to them here. And what is that smoking gun? If you are looking on the YouTube, I have a screenshot. This is what Golden Entertainment's IR website used to look like. This is from the Way Back Machine. This is from April 15th of 2025 on the Way Back Machine. I can tell you that I was looking at Golden Entertainment's uh IR website as recently as uh what was it? Thursday, November 6th was as recently I was I was looking at it and it looked exactly like this. And if you're looking there are seven boxes here. As of Friday, the IR website looked a little different. Here's what the IR website looked like on Friday, and I'm recording this Sunday, November 9th. Here's what it looks like right now as I'm recording it. You'll see on the screen there are five boxes. What are the two boxes that are missing? Where have we gone from 7 to 5? Well, we've dropped off the presentations box and the conference call box. Now, that's kind of weird. Why would a management team decide to change an IR website? Uh, especially an IR website. I mean, again, the wayback machine said it looked like this in April. I telling you, I saw it on Thursday. It look like this on Thursday to my memory. Why would they choose to change this on Friday? Why would they drop off the presentations and conference calls website? Glad you asked. Well, the presentations they used to publish a IR presentation once every 3 months and it would walk through here's our properties, here's our value. Perhaps they didn't want this IR presentation out because one of the things the IR presentation talked about was hey here's why we think our gaming markets and our assets are so attractive. You know, a lot many of their assets are in Nevada. Nevada is one of the largest and fastest growing, richest places in the uh United States. It's a really attractive market. We think our assets are really attractively positioned. Perhaps that's why they took this out. Or perhaps it's because the Golden Entertainment deal to go private is getting structured in a two-part deal. There's a sale lease back to Vichi and then there is the take private of the OPCO. I'll talk about that in a second, but they used to publish in their slides. They would say, "Hey, here's what it would look like if we did a sale lease back of all this real estate we we own." And they would say, "Hey, if we did a sale lease back, you are creating a sale lease back. Our real estate assets would cover the entire value of our stock price and you'd be creating the opco for free." And not only would they give you slides that said this, management would talk about this all the time. And I've got a quote up here from their Q324 deck where the CEO comes out and says, "Look, in our deck, we provide some math around the value of our real estate and how that may drive value certainty in our share price." Given that our math shows our opco is really free if you buy our shares and they're buying back sh they're look, it's not just words and images that they are saying, "Hey, our stock is cheap." They are backing this up with action. They are buying back shares at around $30, under $30 per share constantly. And this action is not light action. The management team here owns a lot of stock. Uh the management team who will be taking them private owns about 25 plus% of the stock. So if they're buying back the stock, it's because they believe that their remaining shareholdings will be increasing value significantly. They believe what they're pitching. So that is my smoking gun evidence. They take all of the times they've talked about, all the presentations they've done that show, that highlight this value, that highlight this real estate value, that highlight the OPC code is getting created for free, they take it all down. So why do they take it all down? Let's break that down. Again, the deal is structured into two components. VG Properties will do a sale lease back of the real estate under seven of Golden's casinos. Uh, and in return, they will take Golden has some debt. Vichi will pay down Golden's four, let's call it 425 million of debt. They'll assume and pay that down and Vichi will also give each of Golden shareholders about 0.9 shares of Vichy common stock which is worth about 27.25 per golden share. Right? So that's one side of the transaction. Shareholders get cash out $2725 per share. The other side of the transaction is the management team will buy the remaining operating assets. Those casinos, the local taverns that Golden Owns, they will buy that for $2.75 per share. Those are the two sizes of transaction. You combine that together, you get the roughly $30 per share. That is the headline value that Golden is talking about when they say, "Hey, we're getting taken out for this big premium." Right? Let's break that down. So this I again sale lease backs are not uncommon in in uh in casinos. They're not uncommon in real estate. A casino owns all this real estate. The real estate it sits there. They say, "Hey, I I need to pull a financing lever. Sale lease back is not uncommon. Golden has been highlighting this for 18 months that they could do it and create a lot of value, pull that lever if they wanted to." Interesting. The sale lease back terms were not disclosed in the Golden press release. You have to go to the Vichy press release where they say hey we're doing this to find the sale lease back terms and see that hey Vichy Golden will the Golden OPCO will be tra pay paying Vichi $87 million per year in rent. It's kind of weird. Why would they not disclose that? Well perhaps they didn't want shareholders to be able to do the math. Golden again in 2024 they own all of this real estate, right? So they're not paying rent but their IBIDA is 155 million in 2024. If we do it on an LTM basis, Vegas has been a little soft. They would uh it would be uh about 10 millions below 145 million. But just to make it easy because I'm doing the screenshot, let's use 155 million. So they're doing 155 million in IBIDA. We'll have to take $87 million of rent away from that because now previously they own the casinos now be paying rent. So 155 minus 87 is the opco Ibida comes out to if I'm doing the math right in my head about $70 million in IBIDA right interesting well keep that number in your head for a second what is that $70 million of IBIDA worth? humorously, Ever Bay Capital, I've never talked to them, don't know who they are, never talked to them. Ever Capital published a letter that came out on November 6th. Uh, you know, literally 15 minutes after the take private deal was announced, Ever Capital published this letter saying, "Hey, Golden, I think you should pursue a sale lease bank. I think you should pursue it." And here's what my our value math says. Uh, they published this letter. So, I don't know if they saw the deal and pressed it, but it does not mention the deal. It just mentioned the value creation opportunity. And everybody thought that this uh the remain the opco could do $50 million per year in IBIDA. Again, I've got it at 70 million on kind of the 2024 numbers, but we can split hairs. You can change the numbers all you want. They thought it' do 50 million and be worth a modest and they call it, this is their quote, modest uh 5.5x multiple. So if we apply that 5.5x multiple to the roughly 70 million in ibida that I was talking about everybody thinks that this company would be worth 376 the opco after the rent expense would be worth $376 million in value. Uh golden has just over 27 million 27 million shares outstanding. So that would imply that OKCO is worth just shy of $14 per share. If you use my 70 millionish of Ibida and you use the Everbay 5.5x multiple and again you can do the math on your own. You can change, you can say, "Hey, earnings have been a little weak so far this year. Let's use 60. Let's use 50." Whatever. That's fine. You can use those numbers. You've got the numbers. You can change them all. However, if you'll go back to the deal as I present it to you, management is buying this opco. This opco that on my numbers is doing 70 million per year in management is buying that opco for $2.75 per share. Multiply that by 27 million shares outstanding. management is buying the opco for $75 million. They are buying the opco for on my math one times evida. If they're buying it for $75 million and I'm using the ever bay multiple and at 5.5x it's worth $376 million that is $300 million of wealth that is being transferred from minority shareholders to management on this opco deal. So what's the solution here? I I mean I think look I've given you the smoking gun. I've given you the math. You can change it all around however you want. This opco business is not worth one times. There's not a world where this opcoode business is worth one times. I follow lots of gaming companies. I follow there. None of the you can debate if it's four times. You can debate if it's six. You can debate if it's eight. You can debate if the right number is 50 million, 60 million, 70 million, whatever you want. There's not a world where this Aco is worth $75 million per share. $75 million. There's not a world where it is worth $2.75 per share. That valuation is management stealing money. Stealing, sorry, I I'm not accusing. This is a legal wealth transfer. They are legally taking that money from shareholders and transferring it to themselves with this deal. I I'll give you one more op codes like this. And I believe everybody mentions this in the letter, but again, I follow these. You can lever these up two and a half, three times very easily. the the management team here could do this deal cash out shareholders at onetimesish ibida and relever the company and they could take out a dividend if they're buying it for $75 million there's a world where they pay minority shareholders $75 million and actually they own 25% so they pay 50 but they're paying $75 million they're valuing the opco for $75 million they could do a dividend recap and take this two two and a halfish times leverage take out a 150 million dividend take 150 million minus 75 million they would be left with $75 million of cash plus control of Vakco. So they would get all the cash. They'd double their valuation instantly and have control of Vako. This is a wealth transfer on the highest [snorts] order. What's the solution here? Let's talk about solutions. I have no again there are two terms. There are two sides of this deal. There's the sale lease back and there's the opco take private. I have no problem with the sale lease back. That is a nifty piece of financial engineering that accelerates value realization. We that's fine. The issue is with the valuation of the opco and the opco private. So there are several things they could do. Number one, there's a go shop here. They could run a full and fair go shop. That's great. I love go shops. However, I will tell you that go shops when a management team is taking a company private are rife with conflicts of interest. Why do I say that? Well, the management team's preparing the numbers. The management team's talking to the biders. the management team can I mean I know if somebody makes me do something I don't want to do I'm kind of ory I don't want to answer their calls I'm lazy I'm sloppy in responding to them I respond to them short management teams can do all that they can publish sandbag numbers they can do all sorts of stuff that's always true but it's particularly true in a regulated industry like gaming because you need gaming licenses and the management team can talk to the regulator and say hey I uh the management team can talk to the reg I'm going to pause this for one second Sorry about that. So, my wife I I've mentioned this on the podcast before. She's nine months pregnant. I got five phone calls from her. I was like, "Oh my god, I need to end this pitch half [laughter] towards the end because I'm going to the hospital." But no, she was just uh her and the baby were visiting to say hello. So, I will try. I have lost my train of thought. I'm going to hop back into it. But if this is crazy, that that's why. So, anyway, I believe I was talking about the go shop and why they don't work. And and the reason it's difficult I mean I love again I love go shops but it's difficult because if it's a management take private management can actively dissuade biders they cannot be super cooperative but the other thing is this is a regulated industry these are casinos there are gaming regulators and management can go to the gaming regulators and the gaming regulators can let any the management they probably have good relationship with the regulators they can say hey regulators let why don't you let unfriendly biders know that they're they're kind of not welcome here right we're we're the people you want to work with we don't want to transfer the license you So very very tough situation for a go shop to work. Go shops are always difficult because people are starting behind the eightball. They have to ramp up. There's already a price in place all this structure all this. But I think it's really difficult with a management state private in a regulated industry with licensed transfers like gaming. So there is a g go shop but here's what I would propose. A the go shop needs to be done in a full fully fair and transparent way. Oh other issue with the go shop here. The go shop needs to be done in such a way that any bidder can bid on the opco and inherit the vichy deal. Right? Because if you put golden up for sale, you say, "Hey, the whole casino's for sale." Well, you've got the sale le is somebody's coming up and they have to go enter a new sale lease back. They have to find all this. People should be able to bid just on the oco if they want. We need to maximize value for shareholders here. So, what I would propose is the go shop needs to be want run in a, you know, the the the classic cliche, a fully fair and transparent way. But what that means is uh biders need to be insured that the company's not going to have regulators lean against anyone. Management needs to say, "Hey, look, we want to take this company private, but if a bidder is coming and they want to offer minority shareholders $5 per share instead of 275 per share, 750 per share instead of 275 per share, [snorts] we can roll our equity with them or we can not roll our equity with them, whatever they would prefer. They can get the same treatment that we're treating. And obviously the vich sale lease back needs to be portable with every shareholder. Here's other things I I I think needs to happen. Hey, just I'll flat out say it again. This is a $300 million wealth transfer from minority shareholders to the management team. If this deal goes through at one time it is an absolutely insane price. It just needs to be bumped. They come out and they say, "Hey, the go shop failed." Then I say, "Cool. We still need the deal to be bumped. This there were so many issues with goshop. This still needs to be bumped. It is a huge wealth transfer." See, there is no reason there when the process comes out. And again, the deal was announced almost 48 hours ago, right? It was announced on Thursday. I'm recording this on Sunday. We haven't seen a lot of things. We haven't seen the price. We haven't seen anything. Shareholders need the ability to vote on these two deals separately, right? There's no reason. I'm pretty sure when the price comes out, it's going to say, "Hey, do you want $30 per share? Actually, 270 per share in cash plus the Vichy stock. Do you want that or do you want no deal?" There is a third choice. The sale lease back as management has noted numerous times in those presentations that I was showing you earlier. The sale lease back can be done independently of the op code going private. Shareholders need the ability to vote on both sets of transactions. Do you want the sale lease back that gets us, you know, 0.9 shares of stockish plus pays down all the debt the company. Do you want that? Do you want the op code private or do you want both? We should be able to vote on that separately because to me I'm completely fine taking the sale lease back and then having this OPCO company with no net debt that does 50 60 70 million per year in Ebidoth as a standalone stub trade. I'm completely fine with that. And guess what? Many of the things that this management is taking them private. They could do everything that they're thinking about they could do it in the public shell. There's no reason this has to go private except to transfer wealth to management team. Now, if they want to pay a fair price, that's fine. But you could leave this as a subco and then you could do the relever transaction I had talked about and you could probably pay a $5 per share dividend to everyone. So, I think that we should be able to vote on this separately. I think the gosh shock needs to be really implemented in a full full and fair way. And short of that, I think the OPCO deal needs to get bumped any which way. So, I think I have rambled quite a bit. again my wife called and I lost my train of thought here but this is I have been doing this for 10 15 years I don't know I can't really think of a more egregious transaction that I have seen and yeah I just I I can think of a few egregious transactions but the way this is being structured where you say hey the headline price the premium it paid is what you focus on but all of that premium is coming from the sale lease and management is effectively being able to take control of the opco for a song. I I just I can't think of many things more egregious. I I mean it will be such an enormous transfer of wealth to the management team if they are able to do this at the at the same time. So what are the solutions here? I I went through go shop needs to be run failure split the vote. What are the solutions for minority shareholders? And look, I will say I'm not trying to form a growth. I I I group with anyone. I've disclosed we're long the stock. Obviously, I'm talking my own literal book here, right? But I I'm a big believer in shareholder governance. And I I think the thing that shareholders can do is you can reach out to the Golden Entertainment team and you can say, "Hey, this is insane. Forget Andrew's math. Andrew's math, he doesn't he doesn't know anything. I wasn't a math major. He doesn't know anything. Here's my math on the numbers." And again, I I present a lot. The Ebidot number I gave you, the 155 million, that's the 2024 Ebidot number. The sale lease back rent, that's from the Vich press release. So, you can do your own math. It's not going to come out too different than mine, but you can do your own math. But you can say, "Here's my math. Here's the value I'm seeing. Management needs to pay a fair price for this. We are going to vote against this transaction. If you don't, we're going to hold management fee. We're going to hold the board's fee to the fire." All of these things need to be communicated to the company. And the company has to know, look, I I I think by taking the presentation downs and by taking the conference calls down, they were showing you that they knew there was some vulnerability. They knew that if you kind of dug deep enough, you would find the smoking gun in the conference calls. didn't take much digging, right? I knew this. I've been following the company for years. I I I instantly knew, but I I think they relied on, hey, people won't dig. And by the way, that the big headline premium, maybe we'll just take the big headline premium. But no, the answer the headline premium comes from the sale of these back. They've been touting that for years. That lever was always available then. It's available as a public company. It's available as a private company. These need to be separated and voted on separately. Shareholders need to communicate to that. And if that happens, if the sunlight comes out, if the smoking gun, if they are held accountable for that, I think that there is a transaction structure that can see the management team do well, the management team take private here, but that can see shareholders get much more and much fairer value for their stock. So, I'm going to wrap it up here. Again, I apologize. My wife hit me with the five times call and I I I thought it might be so maybe I got a little disin, but I I I've never seen I don't think I've ever seen a transaction quite this egregious. It is just insane to me that they could do this. It's ballsy. It reminds me of the loop heist except in a fully legal and a fully legal, not transparent, but a fully legal way. And I am hopeful that by shining some sunlight on the process, I can help kind of get fair value for everyone. So, I will wrap it up there. Uh, thank you for listening. Thank you for listening to me ramble. There's going to be a disclaimer at the end. So, remember, not investing advice. I'm long the stock, all that sort of stuff. But, we'll wrap it up there. A quick disclaimer, nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial adviser. Thanks.