A new Caesars Entertainment Corp. (CEC) reoranization plan from the attorneys for the gaming conglomerate was presented in a Chicago bankruptcy court this week, and this one promises that CEC will offer disgruntled creditors $4 billion to accept the new vision for its stricken main operating unit, Caesars Entertainment Operating Corp (CEOC), thus pulling it out of Chapter 11 bankruptcy.
Caesars Entertainment Corp. sweetens the pot for its junior creditors, but is it enough to get CEOC out of bankruptcy?
It’s $3.5 billion more than CEC originally offered to contribute, and coincidently the same amount that has reportedly been offered, in a completely unrelated deal, for CEC’s digital unit, Caesars Interactive Entertainment (CIE).
If this sounds confusing to you, that’s probably because we are witnessing the ‘largest and most complex bankruptcy in a generation,’ in the words of one Caesars’ own attorneys. But let’s try to explain.
Caesars was acquired in 2006 by venture capitalist companies Apollo Global and TPG in a highly leveraged $27.8 billion takeover. But the economic downturn that ravaged the casino industry from 2008 to 2010 hit Caesars hard, and it has consistently struggled to make a profit in the face of the industry-high debt created by the takeover.
Caesars is now some $20 billion in debt and is attempting to reorganize the $18.4 billion currently held by CEOC. But CEOC’s junior creditors have rebelled, claiming that CEC fraudulently transferred many of CEOC’s best assets to itself and a tangled web of subsidiaries.
They assert that this was done for the benefit of its aforementioned controlling private equity backers, Apollo Global and TPG, although some argue these same companies pretty much caused all this trouble in the first place.
CEOC, meanwhile, was left with nothing but distressed assets and an inability to pay its debts.
A court examiner’s report compiled by the guy who nailed Nixon over Watergate concluded, after pouring over 80 million pages of Caesars’ financial records, that this was indeed the case.
The report alleges that Apollo Global and TPG began a strategy to weaken CEOC and strengthen their own hand in preparation for its bankruptcy sometime in 2012. It also suggested that CEC’s failure to offer warnings of CEOC’s apparent insolvency was a breach of its fiduciary duties.
Potential damages for creditors’ claims on the basis of the report’s findings ranged from $3.6 billion to $5.1 billion.
But that’s OK, because CEC’s new plan is to ‘fills in all the blanks,’ according to the company’s attorney David Seligman. ‘In terms of recoveries to creditors, they are substantially improved down the line’ under the revised plan, he told the court this week.
His colleague, Thomas Kreller, undermined all this by adding that the CEC’s support for CEOC’s new restructuring plan ‘isn’t a given.’
CEC will complicate matters further by announcing that as part of the new plan, it will be merging with another one of its subsidiaries, Caesars Acquisition Company (CAC), in order to create a company called ‘New CEC,’ in which CEOC’s creditors will be given equity.
CAC incidentally is the principal owner of Caesars Growth Partners (CGP), which is the owner of CIE, which Caesars may be considering to sell for $4 billion.
Lawyers for CEOC’s creditors said in court on Wednesday that this was the first time they had heard about any of this.
The former Stardust, and almost Echelon, will soon become Resorts World Las Vegas. The long-planned-out project has finally gotten its regulatory approvals and can now move forward with the building phase.
A computer generation of the proposed Resorts World Las Vegas, which will include a ‘celestial sphere’ that will reportedly flash hotel guests’ selfies. Maybe what happens in Vegas won’t be staying in Vegas after all. (Image: Genting Group)
Malaysia’s Genting Group received approval for its $4 billion Chinese-themed Resorts World just this week. On May 19, the Nevada Gaming Commission (NGC) rubber stamped the licenses of several Genting execs, which should pave the way for construction of Resorts World, Sin City’s first megaresort in a decade, to begin sometime towards the end of the year.
The 3,100-room hotel-casino with a 150,000-square-foot casino floor is expected to be completed in early 2019, and hopes to attract a large Chinese clientele, as well as tourists from the US, of course, and a global clientele as well.
Genting acquired the pocket of land on which the legendary Stardust Casino once stood for a mere $350 million in 2013. The land plot had been semi-vacant since 2008, following the abandonment of Boyd Gaming’s Echelon project after the Great Recession hit Vegas right in the gut.
In a two-hour presentation, Genting officials serenaded the NGC with its plans for Resorts World. The property will feature, on its topmost tower, a ‘celestial sphere’ that will momentarily flash images of guests’ ‘selfies,’ a feature that Genting said would appeal to the Millennial crowd. Can you say ‘what could go wrong?’
And for those anxious to escape the hustle of the casino, there will be an enormous Chinese garden, offering peaceful repose, overlooked by restaurants. And who doesn’t long for a 50-foot replica of a Chinese lantern? Yup, that’s coming, too.
The commission was suitably impressed, although its approval comes as little surprise. Two weeks ago, the project was formally approved by the Gaming Control Board (GCB), which had spent several years assessing Genting’s suitability, and Nevada Governor Brian Sandoval has been behind the project from the get-go.
‘This is a very successful and historic company,’ he said, when Genting first announced its interest in the project. ‘I wanted to let them know we were very interested in having them come here.’
And while the unfinished Echelon stood as a dilapidated monument to some of Vegas’ bleakest years, the planned megaresort, which will build upon part of the unfinished Echelon structure, represents the city’s financial rebirth. It will also add some pizzazz to the north end of the Strip.
Owned by Malaysian billionaire Lim Kok Thay, Genting operates several luxurious Resorts World properties across East Asia, and is currently the largest operator of land-based casinos in the UK, with 47 properties. It has a market capitalization of more than $40 billion, https://myfreepokies.com with more than five different publicly traded companies forming the Genting Group.
Having listened to the presentation and examined the corporate profiling of Genting, gaming commissioners voted their approval unanimously.
Adding casinos in the northern regions of the state is being billed as a potential saving grace for the New Jersey horse racing industry, but not everyone is sold on the revenues formula. (Image: Eclipse Sportswire/ horseracingnation.com)
The New Jersey horse racing industry needs more than a little bit of luck if it hopes to detour off the current path it’s traveling, but horsemen said recently that the November casino referendum to bring gambling north isn’t a viable solution.
Atlantic City’s eight remaining casinos currently pay eight percent of their gross gaming revenues to the state, which in turn uses those monies for senior citizens and disabled persons programs, and funds certain economic revitalization efforts.
The proposed resolution approved by the New Jersey Legislature will ask voters this November if they want to end Atlantic City’s monopoly on gambling and allow for the creation of two casinos in the northern part of the state. A percentage of tax proceeds generated by the new casinos would be directed towards aiding the horse racing industry.
‘Not less than two percentage points in each State fiscal year shall be dedicated for the purposes of programs designed to aid the thoroughbred and standardbred horsemen in this State,’ the resolution states.
Though it initially sounded good on paper, after careful consideration of the complex language, representatives from the racing community are now less than optimistic.
Attorney Dennis Drazin, an adviser to the New Jersey Thoroughbred Horsemen’s Association, initially seemed to back the referendum. ‘We will share in a revenue distribution from the casinos . . . that will help our bottom line to some extent,’ he said during a press conference in early May.
But any optimism Drazin possessed has faded. ‘I never want to say no or be ungrateful . . . but certainly [the current subsidiary] is not enough money,’ Drazin told The Record’s John Brennan.
According to projections, two percent of casino revenues won’t come close to truly assisting the struggling racing industry. Considering the eight Atlantic City casinos are responsible for about $600 million in annual tax revenues, horsemen stand to collect just $3 million should the two northern venues produce similar revenues.
Of course, the northern venues would be expected to outperform the Atlantic City resorts and would likely be taxed at a much higher rate. But regardless, the New Jersey horse racing community wouldn’t be looking at a bounty of fresh income.
Drazin says $50 million is the number they need to split among the tracks and breeds.
There will be no Triple Crown winner in 2016 after Kentucky Derby champ Nyquist finished third at the Preakness Stakes, and while Exaggerator’s win was certainly the top story of the day, it was overshadowed by tragedy earlier in the day.
Homeboykris, a nine-year-old gelding, collapsed and died after winning his race, and Pramedya, a four-year-old filly, was euthanized after fracturing her leg’s cannon bone.
Horses are commonly put down after breaking a leg because they simply can’t recover from the injury. A horse’s top-heavy build, and the fact that you can’t tell a horse he or she needs to lay still for months gives little to no chance that a bone(s) can heal.
The Las Vegas Raiders has a nice ring to it, combining the concept of those who pillage with Sin City in a somewhat poetically charming way. And now, support from a key contingent is making more and more people ready to chant the team’s potentially new name.
New England Patriots owner Robert Kraft has gotten behind the Las Vegas Raiders idea big time, and could be an influencer with other team owners, as old NFL attitudes to the city thaw. (Image: Jim Rogash/Getty)
Robert Kraft, owner of the New England Patriots, has added his voice to the growing chorus of support for the Oakland Raiders proposed move to Las Vegas.
The Raiders’ lease is up in Oakland, and while owner Mark Davis has been able to secure a temporary extension, his team is in need of a permanent home. Davis thinks a $1.4 billion, 65,000-seat domed stadium on a 42-acre plot north of McCarran International airport in Las Vegas could be the answer. Having the backing of Las Vegas Sands’ Sheldon Adelson and his partners isn’t exactly hurting the project, either.
Davis recently pledged a ‘lifetime commitment’ to Las Vegas, and, to show he was serious, his own $500 million towards the building of the stadium.
One impediment to the establishment of the Raiders as Sin City’s first major league sports team, apart from the inevitably disgruntled Las Vegas taxpayer who will have to foot a chunk of the construction costs, is the NFL’S longstanding anti-sports betting stance.
There are suggestions, however, that the league is prepared to give Vegas the benefit of the doubt, and this is why the support of influential NFL owners like Kraft is so important. In order for the move to become a reality, it would need the approval of at least 24 of the NFL’s 32 owners.
‘I think it would be good for the NFL,’ Kraft told USA TODAY Sports. ‘I know Mark Davis has tried so hard in Oakland. If they won’t do it … I want to support him.
‘I came into the league in ’94. Back then, any exploration of that market was dismissed out of hand. I’m looking where we are today and thinking of the last 10-15 years, and the emergence of new media, with Google and Facebook and the like.