What you need to know about SPAC stock LCA Landcadia Holdings II trying to acquire Golden Nugget Online Gaming with a recent purchase agreement to IPO under stock GNOG. Let’s start with the contract highlights then figure out why Golden Nugget Gaming is going public through a SPAC.
Key SPAC Transaction Terms
- Transaction & Enterprise value of approximately $745 million.
- 6.1x GNOG’s estimated 2021 revenue of $122 million.
- Upon purchase Tilman J. Fertitta, Chairman and CEO, through the parent entity of GNOG, hold a controlling economic interest.
- Landcadia II will be assuming $150 million of GNOG debt plus pay prepayment fees, transaction fees and expenses.
- structured as an Up-C where an entity indirectly owned by Mr. Fertitta will retain common units of a partnership managed by the combined companies.
GNOG Stock Highlights
- Started in New Jersey 2013
- First profitable in 2016
- First casino to launch online gaming with Live Dealers in the US
- Top industry Operator
- Net Income of over $11 million in 2019
Is SPAC Stock LCA Golden Nugget Online Gaming Worth Buying Before The IPO?
First we have to understand why Golden Nugget wants to go through a SPAC IPO. Typically companies go through SPACS to fast track there way to public market money, as traditional IPOs can take 6-12 months.
Companies do this for many reasons including to help pay high debt loads or to quickly take a business plan to scale.
The reason GNOG is going public can be specifically found through the trouble related to las Vegas and the lack of tourism since a pandemic event took place in March. They require capital or could risk bankruptcy before the economy recovers.
The parent company Landry’s that owns Golden Nugget is only releasing a public offering through SPAC LCA for there online gaming segment to raise capital for there current losses.
Holding Company Fertitta Entertainment And Parent Company Landry’s
First parent company Landry’s owns the host of companies including Golden Nugget & Rain forest cafe but with there brands focusing in hospitality, being one of the hardest hit sectors these restaurant brands sales are down $1 million per day.
CEO Tilman Fertitta’s SPAC holding company Fertitta Entertainment is even is drowning in debt as well owning the Houston rockets along with equity stakes in many of the parent company Landry’s holdings.
These companies have been leveraging out over $250 million dollars at 15% interest rates to keep these brand alive until tourism returns.
In Conclusion Is SPAC Stock LCA A Buy, Well Yes And No?
Golden Nugget Online Gaming are likely to explode higher like the rest of the SPAC stocks if the acquisition takes place. The risk to a trader is waiting but SPACs come with some security knowing the money can’t be used for anything other then for the intended agreement.
Golden Nugget Online gaming is becoming a huge growing segment across the U.S but keep in mind only in states that have legalized online gambling. Considering the segment is growing it could be seen attractive as a long term investment.
The risks are there on both sides and if investors wish to ride the hype just be cautious as holding companies typically over pay for companies do to the nature of auctions surrounding SPACs before an agreement is landed.