Nevada Gaming Control Board: Eldorado-Caesars Merger Approved

The Eldorado-Caesars merger is now one step closer following an approval by the Nevada Gaming Control Board. In the near future, once the merger is completed, the two companies will create one regional gaming giant under the name of Caesars.

The $17.3 Billion Merger of Eldorado-Caesars Was Approved Yesterday

The acquisition of Caesars Entertainment by Eldorado Resorts was approved yesterday, July 8. During a hearing split into two parts, Nevada’s Gaming Control Board and Nevada Gaming Commission approved the merger. The NGC commission consisted of four members whereas the GCB commission was represented by three people. The vote that passed was unanimous.

With that merger, a new regional gaming giant will be created. This regional gaming giant will operate close to 60 different venues in 16 states. Prior to the approval by Nevada, the merger was also approved by the Federal Trade Commission last month. With that being said, two states – Indiana and New Jersey will need to review and approve the deal.

The merged giant’s control will be in the hands of CEO Tom Reeg, who is actually a part of the management at Eldorado. The resulting entity, should other state commissions also give their go-ahead, will operate under the name of Caesars.

Eldorado’s Investment and Loans

The Eldorado-Caesars merger agreement terms were announced last year on June 24. Under those terms, shares by Caesars were to be bought by Eldorado at $12.75 price per share. With that being said, once the merger is a fact it will be under the name of Caesars will trade the shares on NASDAQ.

Keeping in mind that in March Eldorado had some $3 billion in debt, with the recent merger this debt will increase multiple-fold. Following the merger of the two organizations, the debt may be close to $13-$14 billion. Eldorado will also owe some $12 billion in leases. If we combine all figures, Eldorado may have a debt of more than $25 billion. It’s important to mention that financial analysts count leases as debt, too. In that line of thoughts, Terry Johnson, Gaming Control Board Member said: “This is a sizeable transaction here and my concern is the elephant in the room, which is the amount of debt.“

The Merger Brings Eldorado to Las Vegas

Eight properties by Caesars located on the Strip in Las Vegas will be acquired by Eldorado following the merger. Those properties are:

• Caesars Palace
• Linq Resort
• Planet Hollywood
• Harrah’s Las Vegas
• Flamingo Las Vegas
• Bally’s Las Vegas
• Paris Las Vegas
• Cromwell

According to Brent Yunker, Eldorado Chief Financial Officer the Strip properties are: “incredibly valuable.” Yunker also outlined that the company is: “…going to divest a Strip asset in the first 12 to 24 months.“

Furthermore, Eldorado’s CFO noted that one of the eight properties by Caesars may be closed down. Besides the properties located on the Strip, after the merger of Eldorado-Caesars is complete, the company will have two properties in Laughlin, Nevada. Those are the two resorts Tropicana Laughlin and Harrah’s Laughlin.