This week, executives from Fertitta Entertainment provided key updates about their acquisition of Caesars Entertainment, marking their first detailed disclosure since the announcement of the deal in May. Richard Liem and Steven Scheinthal, the company’s CFO and general counsel, respectively, received preliminary licensing approval from the Nevada Gaming Control Board on Wednesday. They are set to present for final consideration before the Nevada Gaming Commission on July 23.
Liem and Scheinthal have longstanding ties to billionaire Tilman Fertitta, currently serving as the U.S. ambassador to Italy and San Marino. Scheinthal has been with Fertitta since 1988, and Liem joined in 1999. The two clarified that Fertitta is not involved in daily operations, with Liem, Scheinthal, and Fertitta’s wife, Paige Fertitta, forming the board in his absence.
Both executives are familiar faces in Nevada’s gaming landscape, having held licenses in the state since 2005, when Fertitta acquired Golden Nugget Casinos. Their most recent appearance before the board was in 2023 during Golden Nugget’s acquisition of the former Hard Rock Lake Tahoe.
During the meeting, compliance issues were highlighted, particularly reflecting on Caesars' $7.8 million fine last year for anti-money laundering violations related to illegal bookmaker Mathew Bowyer, who now faces a lifetime ban from casinos in Nevada. In response, Scheinthal emphasized that Fertitta and Golden Nugget have a consistent record of compliance with gaming regulations.
"We recognize the significance of compliance… Everyone understands the consequences of not adhering to the rules and regulations," Scheinthal said.
On the matter of the Caesars acquisition, Scheinthal outlined the various steps necessary for finalizing the transaction, which is projected to take over a year. The cash deal totals $17.6 billion, with $5.7 billion in equity and $11.9 billion in assumed debt.
The immediate priorities are antitrust filings and securing gaming license approvals across all jurisdictions where Caesars operates. Fertitta plans to submit a Hart-Scott-Rodino antitrust application to the Federal Trade Commission by July 13, which will initiate a 30-day waiting period. The gaming license applications have been segmented into two groups, and the first set is expected to be submitted this week, with the remaining applications due within 45 days.
"We believe it will take around nine to 10 months from now to secure that approval," Scheinthal indicated.
As a public company, Caesars must also file a proxy statement and gain shareholder approval. The company held its annual meeting on June 9 and is set to release its second-quarter results on July 28, although no conference call with analysts will be held.
Financing the deal is another critical component discussed. Scheinthal noted that while Fertitta has received a commitment letter from a consortium of banks to fund the transaction, they are looking for more favorable terms in the market. This strategy comes with risks given the current high-interest rate climate. After maintaining stable rates in June, the Federal Reserve's outlook on potential rate cuts is uncertain, influenced by persistent inflation and the economic consequences stemming from the U.S.-Iran conflict.
"We hope for a favorable window in the coming months where the market conditions improve, allowing us to raise funds more efficiently and place it into escrow," he stated.
The acquisition includes a go-shop clause that runs until July 11. Notably, billionaire investor Carl Icahn, who previously led the company’s acquisition by Eldorado Resorts, is reportedly making a last attempt to submit a bid for Caesars. His offer of $33 per share, as reported by Bloomberg, exceeds Fertitta's $31 per share agreement. Icahn is exploring interest in a $5 billion debt financing arrangement and retains two of the company’s ten board seats.
However, the Caesars board reportedly prefers the Fertitta bid due to its secure financing structure, according to CNBC.
"Once we have the necessary funding, clear the antitrust review, and gain shareholder and gaming jurisdiction approvals, we’ll be positioned to complete the transaction," Scheinthal remarked.
Additionally, board members questioned Fertitta’s stake in rival Wynn Resorts, where he is the largest shareholder with a 12% ownership. Wynn's stock has declined over 19% this year, partly due to delays at its anticipated UAE resort linked to regional conflicts. When asked about the timing of a potential sale of this stake, Scheinthal expressed surprise, assuring that there are no regulatory issues concerning passive ownership of the stock.
"We are passive investors in Wynn, and we appreciate our investment in their stock; it is our intention to continue holding it," he stated.
