In a recent update on the ongoing acquisition of Caesars Entertainment, executives from Fertitta Entertainment provided crucial details to the Nevada Gaming Control Board. This was their first public engagement since the announcement of the deal in May. Richard Liem, Chief Financial Officer, and Steven Scheinthal, General Counsel of Fertitta, received preliminary licensing approval from the board during their meeting on Wednesday. The matter will return for final consideration to the Nevada Gaming Commission on July 23.
Both Liem and Scheinthal have been closely associated with billionaire Tilman Fertitta, who is currently serving as the U.S. ambassador to Italy and San Marino. Scheinthal has been with Fertitta since 1988, while Liem started in 1999. They reiterated that the ambassador is not involved in the daily operations, having left the company's board in the hands of them and his wife, Paige Fertitta.
With extensive experience in Nevada’s gaming industry, Liem and Scheinthal have held licenses since Fertitta’s acquisition of Golden Nugget Casinos in 2005. Their last appearance before the board was in 2023 when they facilitated the takeover of the former Hard Rock Lake Tahoe.
During the meeting, discussions centered on ensuring compliance. The board noted that Caesars had faced a $7.8 million fine in the previous year due to anti-money laundering violations related to illegal bookmaker Mathew Bowyer, who has since been banned from all casinos in the state. Scheinthal emphasized that Fertitta and Golden Nugget have maintained strong compliance records. "We understand the importance of compliance… Everybody knows what the repercussions are in connection with not following the rules and regulations," he asserted.
Scheinthal outlined the necessary steps for the Caesars transaction to complete, which he estimates will take at least a year. The total cash deal amounts to $17.6 billion, comprising $5.7 billion in equity and $11.9 billion in assumed debt. The immediate priorities include antitrust filings and obtaining gaming licenses across all jurisdictions where Caesars operates. Fertitta is set to submit a Hart-Scott-Rodino antitrust application to the Federal Trade Commission by July 13, which includes an initial 30-day waiting period. The company has organized its gaming license applications into two segments, anticipating completion of the first group this week and allotting 45 days for the remainder. "We think that probably will take nine to 10 months from today in order to get that approval," Scheinthal noted.
As Caesars is publicly traded, it is also required to file a proxy statement and obtain shareholder approval. Caesars had its annual meeting on June 9 and will release its second-quarter results on July 28 without holding an analyst call.
Financing was another significant topic of discussion. Scheinthal mentioned that although Fertitta has secured a commitment letter from a consortium of banks to finance the deal, they are seeking more favorable terms in the current market. Given the unpredictability associated with high interest rates, this approach entails some risk. The U.S. Federal Reserve maintained interest rates in June, with diminishing expectations for cuts due to persistent inflation and the economic implications of the U.S.-Iran conflict. Scheinthal expressed optimism, stating, "Our hope is that in the next few months there will be a window of opportunity where the market will be hotter and [it’s] a more interest rate friendly environment where we can go raise the money and then just put it in an escrow account."
Additionally, the deal includes a go-shop window that remains open until July 11. Carl Icahn, a billionaire investor and the architect behind Caesars’ earlier sale to Eldorado Resorts, is reportedly attempting a last-minute bid for the company. Icahn's offer, reportedly set at $33 per share, would exceed the $31 per share agreement between Caesars and Fertitta. Icahn also maintains two of the company’s ten board seats while exploring a $5 billion debt financing package.
Nonetheless, sources indicate that Caesars' board favors the Fertitta acquisition, citing its secure financing structure. "When we have the money, we get HSR clearance, shareholder approval, approval for all the various gaming jurisdictions, then we’ll be in a position to close the transaction," Scheinthal said.
Lastly, board members questioned Fertitta's stake in rival Wynn Resorts, of which he is the largest shareholder with a 12% interest. With Wynn's stock down more than 19% this year and delays anticipated for its new UAE resort due to regional conflicts, Scheinthal remarked that there’s "no reason to believe" any regulatory issues hinder Fertitta's passive ownership. "We’re a passive investor in Wynn, and we like owning the Wynn stock, and so it’s our desire to keep owning the Wynn stock," he concluded.
