EVERBAY CAPITAL RELEASES LETTER TO GOLDEN ENTERTAINMENT'S BOARD OF DIRECTORS

Rhea-AI Summary

Everbay Capital (NASDAQ:GDEN) called on Golden Entertainment's board to pursue an immediate sale-leaseback of its casino real estate, use proceeds to repay funded debt, and pay a special dividend to shareholders.

Everbay estimates $1.2B after-tax proceeds (assuming $1.4B gross value and $187M tax leakage), repayment of $385M net debt, and a $819M special dividend (~$30.12 per share, ~150% of current price). Everbay also estimates a debt-free RemainCo worth at least $12 per share, implying total shareholder value of $42 per share (210% of current price). The letter urges forming a special committee to explore strategic alternatives for RemainCo.

Positive

• $1.2B estimated after-tax real estate proceeds
• Special dividend of approximately $30.12 per share
• Repayment of $385M net funded debt
• RemainCo valued at least $12 per share

Negative

• $187M estimated tax leakage on real estate sale
• Potential operational risks of OpCo/RemainCo separation not quantified

Insights

Activist finance analyst

Everbay demands a sale-leaseback to repay debt and pay a large special dividend, claiming >100% upside.

The proposal monetizes the company’s Nevada casino real estate via a sale-leaseback, uses proceeds to repay $385 million of net debt, and pays an estimated special dividend of roughly $30.12 per share. Everbay presents a valuation path: $1.4 billion implied real estate value at a 13.5% rent multiple and $1.2 billion after assumed $187 million tax leakage, producing an $819 million dividend and leaving a debt-free operating company ("RemainCo").

The thesis rests on concrete, money-centric mechanics that would materially reallocate value to shareholders. Key dependencies include realizable sale pricing, tax leakage actually incurred, and the ability to execute leases on the cited coverage and multiple. Watch three near-term items: negotiation outcomes with REIT buyers, realized after-tax proceeds, and the Board’s formation of a Special Committee; expect tangible market outcomes within months after a sale process begins.

Corporate governance and strategic advisor

The letter urges immediate Board action to unlock real estate value and then evaluate strategic alternatives for RemainCo.

Structurally, the recommendation separates the real estate from operations to deliver a one-time cash return and preserve an operating company for future monetization. The plan frames a Special Committee to run an arms-length strategic process for RemainCo, and it emphasizes non-preferential treatment of insider bids and broad marketing to buyers.

Execution risk centers on governance choices and process integrity: whether the Board forms an independent Special Committee, selects credible advisors, and manages conflicts if insiders bid. Monitor the Board’s public response, any Special Committee charter, and announced advisor appointments; these governance actions will likely surface within weeks of Nov 6, 2025.

Proposes the immediate pursuit of a sale-leaseback of the Company's casino real estate and use of the proceeds to repay debt and pay a special dividend to shareholders.

Notes the significant underperformance of Golden Entertainment's total shareholder return relative to equity market indices and gaming industry peers.  

Believes that a special dividend from real estate sale proceeds (after repaying all of the company's funded debt) could alone amount to 150% of the current stock price, with shareholders retaining significant additional value and upside via retained ownership in casino operations and tavern businesses.

Suggests that following the sale of the Company's real estate, the Board establish a special committee of independent directors to evaluate strategic alternatives for the remaining company.

NEW YORK, Nov. 6, 2025 /PRNewswire/ -- Today, Everbay Capital LP, a New York-based alternative investment management firm, which manages funds which have been shareholders of Golden Entertainment Inc. (NASDAQ: GDEN), a Minnesota corporation (the "Company"), since 2021, released a letter to the Company's Board of Directors, calling for the Company to immediately pursue a sale-leaseback of the Company's casino real estate, use the proceeds for debt repayment and a special dividend, and then form a special committee of independent directors to evaluate strategic alternatives for the remaining company, which would consist of a casino operating company and a tavern business. 

Please find the full text of the letter below.

                                                                                                            November 6^th, 2025

Board of Directors
Golden Entertainment, Inc.
6595 South Jones Blvd.
Las Vegas, NV 89118

Attn:
Blake L. Sartini
Andy H. Chien
Ann D. Dozier
Mark A. Lipparelli
Terrence L. Wright

Members of the Board of Directors (the "Board") of Golden Entertainment, Inc., a Minnesota corporation ("Golden" or the "Company"):

Everbay Capital LP ("Everbay," "we" or "us") is a New York-based alternative investment management firm founded in 2020 with a value-oriented approach.  Funds managed by Everbay have been shareholders of Golden since 2021 and currently have a substantial long position, as a percentage of fund assets, in the Company's common stock. 

We agree with management's numerous statements on earnings calls that the Company's casino real estate represents a highly valuable asset that is not reflected in the Company's stock price.  We believe that the time has come for the Company to take the obvious actions described below to realize the full value of this real estate for shareholders, which we conservatively estimate could enable shareholders to realize total value of at least $42 per share or 210% of the current stock price¹.  

Background

We believe that Golden's management team and Board have assembled a quality portfolio of assets in the attractive Southern Nevada gaming market.  We commend the Company's management and Board on a series of astute capital allocation decisions over the years including the acquisition of American Casino & Entertainment Properties LLC in 2017, the acquisition of two properties from Marnell Gaming LLC in 2018, the divestitures of the company's Maryland Casino and Distributed Gaming segments in 2023², the deleveraging of the Company's balance sheet following the pandemic (leaving Golden with one of the best balance sheets in its peer group), and the substantial return of capital to shareholders in recent periods via dividends and share repurchases. 

Regrettably, the fundamental value created by these efforts has not been reflected in the Company's stock price. Golden's shareholders have suffered trailing 1-year and 3-year total shareholder returns (including dividends) of (27.1%) and (46.3%), respectively, despite generally robust equity markets.  The Russell 2000 index, for example, has returned 10.8% and 40.4% over the same 1-year and 3-year periods.  Meanwhile, peers of Golden - other land-based gaming operators which own their casino real estate - have averaged trailing 1-year and 3-year returns of 14.5% and 41.1%, respectively³. 

Recommendation Summary

Fortunately, there is simple and obvious solution to deliver a better outcome for shareholders: the Company could easily pursue a sale-leaseback of its real estate, use the proceeds to repay all of its funded debt, and then use the remaining proceeds to pay a special dividend.  As outlined below, based on our conservative estimate of the Company's real estate value, the resulting special dividend to shareholders could amount to roughly $30 per share, representing 150% of the current stock price⁴.  In addition to the special dividend, shareholders would retain ownership of a debt-free casino operating company and tavern business ("RemainCo"), which we conservatively estimate would be worth at least $12 per share in the public market, representing an additional 60% upside, and which could be worth more in a potential sale.  Between the special dividend and RemainCo value, we think shareholders could realize total value per share of at least $42, representing 210% of the current stock price.  Put differently, an investor buying the stock today at roughly $20 per share and then receiving a $30 per share special dividend would create a valuable RemainCo at a negative cost basis of ($10) per share.  We estimate that RemainCo would be worth $12 per share in the public market, representing $22 per share of value creation.  Following such a sale-leaseback transaction and special dividend, the Board should establish a special committee of independent directors ("Special Committee") to explore strategic alternatives for RemainCo.  

Real Estate Sale

As you know, much of the land-based commercial gaming industry over the last decade has spun-off or sold its real estate, resulting in two gaming REITs (Vici Properties Inc. (NYSE:VICI) and Gaming & Leisure Properties Inc. (NASDAQ: GLPI)) owning a substantial portion of the industry's real estate.  We believe that these REITs represent highly motivated buyers of Golden's real estate and that competitive tension between these two buyers would enable Golden to realize full and fair value for its real estate in a sale process.  As you know, these REITs need to keep buying real estate in an accretive manner in order to grow their adjusted funds from operations per share at attractive rates.  Because they already own much of the available real estate of the commercial land-based gaming industry, these REITs have recently been willing to acquire rent income in new ways including financing capital projects at casinos they already own, providing construction financing for greenfield projects, and even acquiring non-gaming real estate.  We think that much of the remaining commercial gaming real estate is owned by operators that are unlikely to want to sell it any time soon.  As such, we think Golden's real estate represents a scarce and highly coveted asset that could be quickly and easily monetized for full value in the current environment.

Assuming the Company's Nevada Casinos⁵ can generate $175 million of EBITDAR (a roughly consensus expectation for 2026) and that the REITs require a 1.7x EBITDAR to rent coverage ratio, the real estate could be leased-back for $103 million of annual rent.  At a 13.5x rent multiple, in line with precedent transactions and the Company's own assumption in its latest presentation⁶, Golden's real estate would be worth nearly $1.4 billion, far greater than the $931 million enterprise value for the entire Company implied by the current stock price⁷.  Assuming $187 million of tax leakage⁸, after-tax proceeds of $1.2 billion could be used to (i) repay the Company's $385 million of net debt⁹, and (ii) pay a special dividend to shareholders of $819 million, or $30.12 per share, representing 150% of the current stock price.  We note that the Company provides a valuation of the real estate it its latest presentation, which we think is overly conservative, but which still substantially exceeds the enterprise value implied by the current stock price¹⁰.

While we understand the potential drawbacks of the "OpCo" business model, we do not believe that the timing of a sale of the real estate should be tied to a sale of RemainCo.  As we explain above, the sale of the real estate is an easy transaction that can likely be quickly executed with obvious buyers.  A sale of the RemainCo, on the other hand, would likely be a more complex and time-consuming process.  We fear that holding up a sale of the real estate to wait for the perfect time to monetize the RemainCo risks depriving shareholders of the 110% return opportunity outlined above.  There simply is no logical reason why a sale of the real estate should be held up for the right RemainCo monetization event. 

RemainCo Options

In addition to the special dividend, shareholders would retain ownership in a debt-free RemainCo, which we estimate would generate $50 million of EBITDA (after rent)¹¹.  RemainCo could either be sold in the near-term, or remain a public company for a period of time, returning its substantial free cash flow to shareholders in the form of dividends and share repurchases.   As per our illustrative valuation above, the special dividend from the real estate sale alone would amount to 150% of the current stock price, offering an attractive return for shareholders even if RemainCo were to be worthless.  And of course, despite the drawbacks of the OpCo business model, a debt-free RemainCo generating $50 million of EBITDA would hardly be worthless. 

Applying a modest 5.5x multiple to RemainCo's $50 million of EBITDA and adding roughly $2 per share for the Company's excess land¹² (which could be retained),  RemainCo could easily be worth over $12 per share in the public market, or substantially more in the M&A market.  The sum of the special dividend outlined above and this estimate of RemainCo value would amount to total value per share of over $42, representing 210% of the current stock price.  We think such a value realization opportunity is simply too good for the Board to ignore. 

Following the sale-leaseback transaction and special dividend, the Board should establish a special committee of independent directors ("Special Committee") to explore strategic alternatives for RemainCo.  Any potential sale of RemainCo should involve a full process run by the Special Committee with appropriate external financial advisors and should involve marketing RemainCo to any and all potential strategic and financial buyers.  In the event that insiders seek to acquire the company (i.e. a "management buyout"), they should not be given preferential treatment by the Special Committee relative to other potential bidders; any negotiations between the Special Committee and company insiders should be arms-length, so as to enable shareholders to realize the highest and best value for the Remainco.  Absent an attractive bid for RemainCo, it could remain outstanding as a public company and use its substantial free cash flow to pay dividends and repurchase shares, enabling shareholders to accrue value pending the right conditions to sell RemainCo. 

Merging RemainCo with another public casino "OpCo" would likely involve substantial execution risk, burden the combined company with excessive lease-adjusted leverage, and would push out the timing of shareholder value realization for the Company's shareholders by many years and thus should not be considered as a viable option.  We are confident that attractive monetization opportunities could be found by a Special Committee conducting a thorough strategic process that would deliver more upside to shareholders without these risks. 

Concluding Thoughts

We think the valuation math discussed in this letter is conservative in a number of ways. We are assuming substantial tax leakage without giving credit for any tax attributes or tax mitigation strategies the Company may have.  We are assuming 13.5x rent for the real estate even though the REITs trade at higher multiples than that and thus could potentially pay more.  We are assuming a modest 5.5x EBITDA multiple for RemainCo, which would likely prove conservative relative to where it would trade in the public market, and which doesn't include any credit for the possibility of realizing a control premium in a subsequent sale of RemainCo.  We are also using roughly consensus 2026 numbers, which have come down substantially.  As such, we are not giving credit for any operational turnaround that may occur in the coming years, which would only add to the upside of this strategy.   

While we are not suggesting that every public company should sell itself simply because it can realize a premium – we understand that Boards should look to maximize long-term value - we think that in a situation like this where the status quo "WholeCo" strategy has failed to generate attractive shareholder returns over an extended multi-year period, and where the gap between public-market and private-market value is so large and seems to only grow larger as time passes, action must be taken to realize value for shareholders.  Simply put, we believe that we (and the company's shareholders generally) have waited long enough.  It is not reasonable to have confidence that the public market is going to properly reflect the company's real estate value in the stock price any time soon.  Thus, the Board should take action to realize this value for shareholders in the M&A market, which currently offers favorable conditions.  

We have been willing to be patient, retaining a position the Company's shares continuously since 2021.  We agree with management's assessment, as stated many times on its earnings calls, that its stock price doesn't reflect the Company's real estate value.  In fact, we believe Golden's stock price has been woefully undervalued for years and is currently more undervalued than ever.  The Board is in the enviable position of having the ability to affect a fairly simple transaction that would unlock an estimated 110% upside for shareholders.  Given the abysmal returns that shareholders have suffered, we believe it is time for the Board to take decisive action.  I would welcome the opportunity to discuss this further with the Board or with a subset of the Board which is responsible for the issues discussed herein.  In light of the urgent need for action, and in order to provide the market with transparency, we are also making this letter public.  We hope this will encourage a broader evaluation and analysis of our proposals and allow the Company to execute on the delivery of value for all of its shareholders.   

Best Regards,

Frederick Steindler
Everbay Capital LP

About Everbay Capital LP

Everbay Capital LP is a New York-based, value-oriented alternative investment manager focused on distressed debt, high yield credit and special situation equities.  

Disclaimer

As of the publication of this report, funds managed by Everbay Capital LP have a long position in Golden Entertainment's common stock.  Everbay Capital may change its views about its investment position in Golden Entertainment at any time, for any reason or no reason, and at any time may change the form and substance of any of its related or unrelated investment positions. If it does so, it will not be under obligation to inform anyone and will not do so unless required by law.  All content in this press releases and the attached letter represent the opinions of Everbay Capital and are for discussion and general information purposes only.  Everbay Capital has obtained all information herein from publicly available sources and such information is presented "as is" without any warranty of any kind whether express or implied.  All data and other information are not warranted as to completeness or accuracy and reflect Everbay Capital's views as of this date, all of which are accordingly subject to change without notice. 

This document is not intended to be, nor should it be construed as, a marketing or solicitation vehicle for Everbay Capital LP nor any fund managed by Everbay Capital LP, and it is not investment advice, and investment recommendation, nor an offer to buy or sell, nor the solicitation of any offer to buy or sell any securities, including without limitation any interest in a fund managed by and/or associated with Everbay Capital LP.  Any offer or solicitation may only be made pursuant to a private placement memorandum, agreement of limited partnership, or similar or related documents, which will only provided to qualified offerees and should be reviewed carefully and in their entirety prior to making or considering an investment in any fund managed by Everbay Capital LP. 

The information contained in this press release and the attached letter may include, or incorporate by reference, forward-looking statements, which would include any statements that are not statements of historical fact.  These forward-looking statements may turn out to be wrong and can be affected by inaccurate assumptions, or by known or unknown risks, uncertainties, and other factors.  There can be no assurance that forward-looking statements will materialize or that actual results will not be materially different than those presented. 

Media Contact: Frederick Steindler, fsteindler@everbaycapital.com 

1 Based on Golden's closing stock price of $20.11 on 11/4/25, and estimated value realization per share of $42.23 2 The divestitures of the company's Maryland Casino segment and Distributed Gaming business in MT closed in 2023, while the divestiture of the company's Distributed Gaming business in NV closed on 1/10/24. 3 Source: Bloomberg LP.  Numbers in this paragraph represent total return for the period including dividends reinvested in the security. Trailing 1-year Returns are for the period 11/4/24 to 11/4/25.  Trailing 3-year Returns are for the period 11/4/22 to 11/4/25.  Russell 2000 index return represents the return of the iShares Russell 2000 ETF (IWM).  Return for gaming peers which own their casino real estate represents the average of the returns for Monarch Casino & Resort, Inc. (NASDAQ: MCRI), Boyd Gaming Corporation (NYSE: BYD), and Red Rock Resorts, Inc. (NASDAQ: RRR).  While BYD leases a small portion of its real estate, we believe it represents a relevant peer since it owns the vast majority of its real estate.  We do not include Full House Resorts, Inc. (NASDAQ: FLL) as a peer, despite the fact that it owns its real estate, as we believe that its development-focused nature makes it an inappropriate peer.  Given Golden's purely domestic business, we exclude gaming companies with significant international operations, even if they own most or all of their real estate. 4 Based on Golden's closing stock price of $20.11 on 11/4/25, and an estimated special dividend of $30.12 per share. 5 "Nevada Casinos" includes both the Nevada Casino Resorts and Nevada Locals Casinos segments. 6 "Medium" case illustrative real estate value in Golden's September 2025 presentation, page 8, assumes a 13.5x rent multiple. 7 Based on Golden's closing stock price of $20.11 on 11/4/25, $385mm of net debt as of 6/30/25, and 27.2 million diluted shares outstanding. 8 We assume a $500 million cost basis for the real estate, which equates to approximately two thirds of the Company's net PP&E on the second quarter 2025 balance sheet.  We apply a 21% tax rate to the resulting gain on selling the real estate for $1.4 billion. 9 Net debt as of the second quarter of 2025. 10 The Company's September 2025 Presentation, page 8 provides an illustrative real estate valuation, which values the real estate at $1.15 billion in the "medium" case, which exceeds the enterprise value implied by the current stock price of $931mm (based on Golden's closing stock price of $20.11 on 11/4/25, $385mm of net debt as of 6/30/25, and 27.2 million diluted shares outstanding). 11 Assumes $175mm of Nevada Casinos EBITDAR less ($103mm) of rent, plus $26mm of Taverns EBITDA, less ($48mm) of Corporate Expense. 12 After-tax value assumes an average value of $1.1 million per acre for the Company's 62 excess acres of excess land, zero cost basis, a 21% tax rate on the resulting gain, and 27.2 million diluted shares outstanding.

 

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SOURCE Everbay Capital LP