Yet Another Value Podcast - Shining a light on Golden Entertainment's "wealth transfer" $GDEN

Episode Date: November 11, 2025

On the heels of sending an open letter to the Golden Entertainment's (GDEN; disclosure: long) board, host Andrew Walker dives deeper into Golden's take private deal and why he believes it transfers ~$300m of value from minority shareholders to insiders.Open letter to GDEN board: https://www.yetanothervalueblog.com/p/an-open-letter-to-the-golden-entertainment___________________________________________________________[00:00:02] Intro to special episode[00:03:26] Comparison to Louvre heist[00:04:20] Smoking guns and IR site change[00:07:35] Sale leaseback structure details[00:09:15] Valuation analysis and critique[00:13:30] Everbay letter and valuation math[00:16:45] Management buyout vs. fair value[00:19:00] Critique of go-shop process[00:21:10] Regulatory hurdles for go-shop[00:23:40] Call for fair deal structure[00:24:50] Closing thoughts and disclaimerLinks:Yet Another Value Blog - https://www.yetanothervalueblog.com See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer

All right. On today's episode of the yet another value podcast, I had 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 in advice, see the full disclaimer. I talked about at the beginning. I talk about it then and should have see the full disclaimer or 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 a 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, word from our sponsors. Today's podcast is sponsored by Alpha Sense. Look, you know Alpha Sense as a long-time sponsor of this podcast. I love all their tools.

They're Virgin AI tools. I love their expert networks. And I increasingly love their webinars. 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, the IRRs, 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 sent cities from capital allocators and Zemir Smith, the director of E&I Research Out of Since. 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 Alphsense 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, any 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 for the best disinfectant. So I want to use my small niche platform to shine some sunlight on a deal that I think needs some sunshine on it. So if you've listened to a solo episode before, you know, most of my podcast I have a guest on, we don't use any visual aids because a lot of people listen. So little episodes, you know what? 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 go over to the YouTube and see the video. 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. Visual aides, 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 G-D-E-N. I'm going to disclaim multiple times. I am long. We'll go to a disclaimer side in a second. But 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 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 of 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 every show notes I include a link to to get another volume of disclaimer. You can go see it there. So there's my disclaimers. Again, I'm biased. I would like this process to result in a higher ban.

So let's dive into it. And to dive into it, I want to start in. Becca, there was, in October, there was a theft from the Louvre. About $100 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. S&L, weekend update. Bowen Yang comes out as George Santos and reveals he did something with her in the loop. I've got a screenshot of that. Jesse Eisenberg was going around and joking that now you see me three. the Louvre Heist was a promotion for it. So comedians are joking about everyone knows about the heist at the Loof. Why do I mention that? Because the Loof 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 Lube Heist. It will result in a wealth transfer that from my... minority outside shareholders to management. And I'm going to break all that down in a second. Well, let me back up. So, you know, in any heist, the Louvre heist, and 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. I think it kind of gets popular when it's not a smoking gun. It's actually a smoking pistol in a Sherlock Holmes.

story is used, but 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 believe the most famous smoking gun would be the Nixon tapes in the Watergate scandal in the 70s. There was the smoking gun tape that is Nixon disgusting to hover off, if I remember correctly. So that's 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 Wayback 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 IR website as recently as, what was it, Thursday, November 6th was as recently as 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 seven to five? 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, especially in IR website?

I mean, again, the Wayback Machine said it looked like this in April. I am telling you, I saw it on Thursday. It looked 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? I'm glad you asked. Well, the presentations, they used to publish a IR presentation once every three 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 IRA presentation talked about was, hey, here's why we think our gaming markets and our assets are so attractive. You know, a lot of, many of their assets are in Nevada. Nevada is one of the largest and fastest growing, richest places in the 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 goal, an entertainment deal to go private is getting structured in a two-part deal. There's a sale lease back to Vichy, and then there is the tape 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 leaseback of all this real estate we own. And they would say, hey, if we did a sale lease back, you are creating a sale leaseback. 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. 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 share. 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. The management team who will be taking them private owns about 25 plus percent of the stock. So if they're buying back to stock, it's because they believe that their remaining shareholders

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 opco 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. Vichy properties will do a sale leaseback of the real estate under seven of Golden's casinos,

and in return, they will take, Golden has some debt. Vichy will pay down Golden's, let's call, 425 million of debt. They'll assume and pay that down. And Vichy 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 cashed out $27.25 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 again, sale leasebacks are not uncommon 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 need to pull a financing lover. Sale leaseback 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 leaseback 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, the Golden Opco will be paying Vichy $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 EBDA is $155 million in 2024. If we do it on an LTM basis, Vegas has been a little soft. They would be about $10 million 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 EBITA. We'll have to take $87 million of rent away from that because now previously they owned the casinos, now I'll be paying rent. So 155 minus 87 is the Opco EBITDA. Comes out to, if I'm doing the math, right in my head, about $70 million in EBITDA, right? Interesting. Keep that number in your head for a second. What is that $70 million worth? Well, humorously, Everbay Capital, never talked to them, don't know who they are, never talked to them. Ever Bay Capital published a letter that came out on November 6th, you know, literally 15 minutes after the Tate Private

Deal was announced, Everbay Capital published this letter saying, hey, Golden, I think you should pursue a sale lease back. I think you should pursue it. And here's what our value math says. 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 Everbay thought that this, the Remain Co, the Opco, could do $50 million per year in EBIT. Again, I've got it at 70 million on kind of the 2024 numbers, but we can split herrings, 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 5.5x multiple.

So if we apply that 5.5x multiple to the roughly 70 million in EBITDA that I was talking about, Everbae thinks that this company would be worth 376, the opco, after the rent expense, would be worth $376 million in value. Golden has just over $27 million. There's 27 million shares outstanding. So that would imply that ACO is worth just size of $14 per share if you use my $70 million-ish of EBITA 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 week 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 in all. However, if you'll go back to the deal as I presented to you, management is buying this opco. This opco that on my numbers is doing $70 million per year in EBTA.

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're buying the opco for, on my math, one-time's EBTA. If they're buying it for $75 million, and I'm using the Everett 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 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-time's EBITDA. There's not a world where this op-co business is worth one-time's EB-D-A. I follow lots of gaming companies. I follow, none of the, you can debate if it's four times EBDA. You can debate if it's six, you can debate if it's eight.

You can debate if the right EBITO number is 50 million, 60 million, 70 million, whatever you want. There's not a world where this opco is worth $75 million per share. $75 million. There's not a world where it's worth $2.75 per share. That valuation is management stealing money. Stealing, sorry, I'm not accused. This is a legal wealth transfer. They are legally taking that money from shareholders

and transferring it to themselves with this deal. I'll give you one more. Opcodes 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 management team here could do this deal, cash out shareholders at one-time-ish EBITDA, and re-lever the company, and they could take out a dividend.

If they're buying it for $75 million, there is 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 to Opco for $75 million. They could do a dividend recap and take this to two and a half-ish times leverage, take out a $150 million, take $150 million minus $75 million. They would be left with $75 million of cash plus control of the opco.

So they would get all the cash. They double their valuation incidentally and have control of the ACCO. This is a wealth transfer on the highest 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 leaseback, and there's the Opco take private. I have no problem with the sale leaseback.

That is a nifty piece of financial engineering that accelerates value realization. That's fine. The issue is with the valuation of the Opco and the Opco take private. So there are several things they could go. 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 GoShops, 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 is talking to the bidders. The management team can, I mean, I know if somebody makes me do something I don't want to do, I'm kind of ornery. I don't want to answer their calls. I'm lazy. I'm sloppy and 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, the management team can talk to the regulation. I'm going to pause this for one second.

All right. Sorry about that. So my wife, I 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 towards the end because I'm going to the hospital. But no, she was just her and the baby were visiting to say hello.

So I will try. I have lost my turn and thought. I'm going to hop back into it. But if this is crazy, that's why. So anyway, I believe I was talking about the go shop and why they don't work. 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 disoad bidders. They cannot be super cooperative.

But the other thing is this is a regulated industry. These are casinos. They're 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, why don't you let unfriendly bidders know that they're kind of not welcome here, right? We're the people you want to work with.

We don't want to transfer the license. You don't want. So very, very tough situation for a go shop to work. Go shops are always difficult because people are starting behind the eight ball. 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 interregulated industry with license transfers like gaming. So there is a 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 is up for sale. Well, you've got the sale. Somebody's coming up and they have to go enter a new sale lease back. They have to find out of this.

People should be able to bid just on the upco if they want. We need to maximize value for shareholders here. So what I would propose is the go shop needs to be run in a, you know, the classic cliche, a fully fair and transparent way. But what that means is bidders need to be insured that the company is 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, we can roll our equity with them or we cannot roll our equity. with them, whatever they would prefer. They can get the same treatment that we're treating. And obviously, the Vichu sale lease back needs to be portable with every shareholder.

Here's other things I think needs to have it. 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 sale goes through it one time, it is an absolutely insane price. It just needs to be bumped. They come out and they say, hey, the go shop bill. Then I'd say, cool, we still need the deal to be bombed. There were so many issues with the GoShop, this still needs to be bumped. It is a huge wealth transfer. C, there's no reason when the proxy 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 Vichie stock? Do you want that? Or do you want that? Or or do you want no deal? There is a third choice. The sale leaseback, as management has noted numerous times in those presentations that I was showing you earlier, the sale leaseback can be done independently

of the op-co going private. Shareholders need the ability to vote on both sets of transactions. Do you want the sale lease back that gets us 0.9 shares of bitchy stock-ish plus pays down all the debt to the company? Do you want that? Do you want the op-cotech 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 dollars per year in EBITO as a standalone stub trade. I'm completely fine with that. And guess what? Many of the things that this management is taking the 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 subcoe, and then you could do the relever transaction I had talked about. probably pay a $5 per share dividend to every rent. So I think that we should be able to vote on this separately. I think the go shop needs to be really implemented in a full, full and fair way. And short of that, I think the Opco deal needs to get pumped any which way. So I think I have rambled quite a bit. Again, my wife called and I lost my trade in 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 can think of a few egregious transactions, but the way this is being structured where you say, hey, the headline price, the premium paid is what you're focused on, but all of that premium is coming from the sale lease back and management is effectively being able to take control of the opco for a song. I just, I can't think of many things more egregious. I mean, it will be such an enormous transfer of wealth to the management team. They are able to do this at the same time.

So what are the solutions here? I went through GoShop needs to be run failures, split the boat. What are those solutions for minority shareholders? And look, I will say, I'm not trying to form a group with anyone. I've disclosed we're along the stock. Obviously, I'm talking my own literal book here, right? But I'm a big believer in shareholder governance. And 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. Andrews Smith, 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've presented a lot. The EBITDA number I gave you, the $155 million,

that's a $2,0.24 EBITDA number. The sale leaseback rent, that's from the Vichy 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 feet to the fire. All of these things need to be communicated to the company, and the company has to No. Look, 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. It didn't take much

digging, right? I knew this. I've been following the company for years. I instantly knew, but I think they relied on, hey, people won't think. And by the way, the big headline premium, maybe people would just take the big headline premium. But no, the answer, the headline premium comes from the sale lease back, they've been touting that for years. That lever was always available to them. 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 can 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 thought it might be so maybe I got a little bit of stern at the end but I I've never seen I don't think I've ever seen a transaction quite disagree just insane to me that they could do this it's ballsy it reminds me of the luth 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

Thank you for listening. Thank you for listening to me, Ramble. There's going to be disclaimer at the end. So remember, not investing advice. I'm long to stock, all that sort of stuff. But we'll wrap it up there. A quick disclaimer. Nothing on this podcast should be considered an 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 advisor. Thanks.