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Eldorado offer too low for Caesars to sell

Wed, Jun 19, 4:31pm by Staff Writer

Billionaire Carl Icahn is more eager to sell casino chain Caesars Entertainment than the company’s board, The New York Post has learned.

The octogenarian investor thinks the board of America’s biggest gaming company is demanding too much for the $6.2 billion company in its ongoing merger talks with rival casino operator Eldorado, insiders allege.

The owner of Bally’s and Harrah’s kicked of its auction two months ago with a price of $13 a share.

As The Post exclusively reported on June 6, Eldorado countered with a bid of $10.50 a share, which the board unanimously rejected as too low.

Icahn owns a 28.5 per cent stake in Caesars with swaps, has agreed that Eldorado’s $10.50, which represented a measly 15 per cent premium over the stock, was unacceptable.

But he is also willing to accept less than the board is now seeking, sources said.

Eldorado sells assets to fund raise

Separately, Eldorado announced on Monday that it sold three casinos and other assets, including real estate, for $385 million.

The proceeds could help Eldorado raise money toward what is expected to be a stock-and-cash offer for Caesars, which also owns Harrah’s and Bally’s.

One reason for the cash raise is that Eldorado executives fear the merger could be blocked by gaming regulators if they bid much higher and become too leveraged, sources said.

Caesars, which already went through a bankruptcy in 2015 due to its debt, has more than $18 billion in net debt that would be assumed by the new merged company.

Eldorado has publicly said it is not comfortable with debt levels that exceed 5.5 times, which could mean an offer price of under $12 a share, according to investment bank Jefferies.

In May, a Jefferies analyst report said that if Eldorado paid $11.50 a share for Caesars the resulting enterprise would carry debt equal to 5.4 times the EBITDA or cash flow, even assuming $500 million in synergies.

The two sides continue to be in advanced talks, sources said.

“They [Caesars] are getting close but are still trying to get a price that is right for all shareholders,” a source said of the talks.

Icahn has three appointees on the eight-member board and helped choose the CEO, who also gets a say in the deal.

Those four votes, along with Icahn’s nearly 30 per cent stale, could help push the deal through even if Eldorado offers close to $12 a share, sources said.

“No one’s better at getting things done than Carl,” a source familiar with Icahn said, believing that he will ultimately get his way.

Icahn bought much of his stock in January for around $9 a share.

Caesars and Eldorado declined to comment.

Caesars withdraws from Greek casino licencing

Casino operator Caesars Entertainment’s interest in Greece’s Hellinikon licence derby has ended after further delays to the process.

Calvin Ayre is reporting that the completion of the 30-year licence for an integrated resort casino on the site of Athens’ old airport would likely face further delays due to the government’s inability to solidify its zoning plans on time.

The consultation period for the project’s environmental impact study doesn’t conclude until next Tuesday, after which the government’s joint ministerial decision on the project’s zoning plan still needs to be completed.

The current deadline for interested casino applicants to file their binding offers is May 31, which was itself a delay from April 22.

The expectation is now that this will be pushed back once again, this time until the end of June.

The perpetual delays in launching the 8 billion euro Hellinikon project tender appear to have reduced the number of interested parties from four to three.

Caesars, which was among the first companies to declare its Greek intentions is reportedly rethinking its interest in the project.

Caesars famously opted against pursuing a Macau casino concession back in the day and ever since has been desperate to atone for that gaffe by pursuing other international opportunities.

However, with new investor Carl Icahn apparently hellbent on selling the company in whole or in part, Caesars is apparently not looking to involve itself in anything that might further complicate its already messy balance sheet.


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