Shares of Red RockResorts Inc. tumbled in their first day of trading April 27, falling2.92% to $18.93 apiece as of midafternoon.
The company, which focuses on the so-called Las Vegas localsmarket due to its catering to Sin City residents and not holiday-goers, its IPO of 27,250,000 sharesof common stock at $19.50 apiece, the midpoint of the previously contemplated of $18.00 to $21.00 per share.
The company sold 27,054,686 shares in the offering, and sellingstockholders sold 195,314 shares. The offering represents gross proceeds of approximately$531.4 million, or $611.1 million if the underwriters exercise their option to purchaseup to another 4,087,500 shares.
Red Rock is the second gaming-related IPO in the last week. 's REITsubsidiary, , at the of its expected price range April20. MGM Growth's stock was in positive territory a week later, trading at $22.42as of midday April 27.
Red Rock was heavily criticizedin the lead-up to its IPO by the UNITE HERE labor union, which called the offeringa "second-class gaming IPO." The union questioned the $460 million cashpayment Red Rock will make to acquire its management company, Fertitta Entertainment,which is majority-owned by Chairman and CEO Frank Fertitta III and Lorenzo Fertitta,who sits on Red Rock's board of directors.
Red Rock, formerly known as Station Casinos, was taken for $8.8 billion in 2007 by a group including Colony CapitalLLC and the Fertitta family, which founded the company in 1976 with the openingof a 5,000-square-foot casino offering 100 slot machines. In 2009, with $5.4 billionin debt, the company underwent a restructuring.
Red Rock now owns and operates 19 casinos in the Las Vegas regionalmarket and manages two tribally owned casinos in Sonoma County, Calif., and AlleganCounty, Mich. It expects to report adjusted EBITDA of $130.2 million to $136.2 millionin the first quarter, which represents a year-over-year increase of 11.2% at themidpoint, according to the company's registration statement.
Deutsche Bank Securities, J.P. Morgan, BofA Merrill Lynch andGoldman Sachs & Co. are serving as the joint lead book-running managers of theoffering, which is expected to close May 2, with Wells Fargo Securities, Citigroupand Macquarie Capital serving as book-running managers.