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After New Jersey, Eldorado Looks to Close on Caesars Deal

Friday, July 17, 2020   /   by Ken Couture

After New Jersey, Eldorado Looks to Close on Caesars Deal

Wednesday was supposed to be the day that Eldorado Resorts and Caesars Entertainment Corp. got the last OK needed to do what they’ve said they’d do for more than a year.


But that will have to be Thursday instead, assuming the approval comes as expected from New Jersey regulators on the $17.3 billion merger of the two companies.


New Jersey’s Casino Control Commission met Wednesday, when most thought Eldorado would get a decision. But James Plousis, who chairs the three-member board, said the hearing would continue Thursday morning.


Plousis and Commissioner Alisa Cooper heard testimony from five Eldorado witnesses for about six hours Wednesday. Only Plousis and Cooper will deliberate on the decision since Commissioner Sharon Anne Harrington retired earlier this month.


Eldorado CEO Tom Reeg, Chief Operating Officer Anthony Carano, Chief Financial Officer Bret Yunker and two others offered testimony similar to what they discussed in Nevada on July 8 and in Indiana Friday and Monday.


In New Jersey, where Eldorado already operates the Tropicana Atlantic City, the company said it would add Caesars Atlantic City and Harrah’s Resort at Atlantic City if the deal is approved. Caesars already announced in April that it is planning to sell Bally’s Atlantic City to Twin Rivers Holdings LLC of Rhode Island for $25 million.


Among the 40 conditions New Jersey regulators are requiring of Eldorado for approval are $400 million in investments over three years. It also will be required to put $125 million into a trust account if the Bally’s deal fails to close on time. The company must assure no layoffs for five years after the deal closes.


Eldorado and Caesars has had to gain approval from shareholders, the Federal Trade Commission and regulatory bodies from the 16 states in which the merged company will operate, including Nevada, in order for the deal to close.


As for what happens after a decision is reached in New Jersey, company officials aren’t doing interviews with the media. But they’ve spoken volumes with regulators in Nevada and Indiana in the past week to explain why it makes sense for the much smaller Eldorado to absorb a Las Vegas institution in Caesars Palace and its eight sister properties.


While Eldorado officials aren’t talking, there are indications that the deal will close next week. And, Las Vegas-based Brendan Bussmann says after that is when the real work begins.


“Shareholders need to get together one more time to ratify everything,” said Bussmann, director of government affairs for Global Market Advisors LLC.


“Once you sign the paperwork and everything, that’s when the real work begins,” he said. “Now, you have to start merging these two organizations into one from a systems standpoint and from an operations standpoint. While it’s been a long journey to get to the point we’re at today, delayed because of COVID, things can move in a forward direction.”


Eldorado’s way of doing things will be different from Caesars. While Eldorado has emphasized to regulators across the country that they prefer to give their local managers authority to make decisions based on their own market, Caesars was more centralized with many big decisions emanating from Las Vegas.


Reno’s Carano family has enjoyed success and members of the family will continue to fill the major executive roles of the corporation.


The new company will be called Caesars Entertainment and the public company stock will be traded using the CZR ticker symbol on the Nasdaq exchange. The new Caesars also will keep many of the traditional Caesars brands and use them as needed across the country.


Eldorado also will take hold of the Caesars Rewards loyalty program and integrate existing Eldorado customers into it quickly.


In regulatory meetings, Eldorado executives talked openly about divesting properties to comply with conditions imposed by various commissions and boards.


A new batch of divestitures was ordered in Indiana. The company also said it has the ability to sell other properties, especially if a sale would help raise cash to pay off debt, which doesn’t become a factor until 2024.


Speculation abounds as to whether a current Caesars asset in Las Vegas would go on the market and Eldorado officials aren’t saying.


“If I had a dollar for every rumor I’ve heard on a property for sale, I could be really, really wealthy,” Bussmann said.


Bussmann said potential buyers are nearly as interesting as the speculation of which property Eldorado would part with.


Bussmann said not to count out tribal governments that may have generated the financial firepower to consider purchasing an asset.


The Seminole Tribe in Florida has had success with its Hard Rock properties — and the Hard Rock brand is going away in Las Vegas with the transformation of the existing hotel to Virgin Hotels Las Vegas.


California tribal operations also could have the wherewithal to enter the market. Bussmann said the San Manuel Band of Mission Indians fits the profile. The tribe, with a casino in Highland, California, in San Bernardino County, has philanthropic ties to UNLV and also is a sponsor for the Vegas Golden Knights and the Las Vegas Raiders.


 


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