Ferttita executives outline Caesars transaction timeline to Nevada regulators

For the first time since the deal was announced in May, representatives from Fertitta Entertainment provided more insight into the company’s acquisition of Caesars Entertainment this week when two executives received preliminary licensing approval from the Nevada Gaming Control Board.

Richard Liem and Steven Scheinthal, Fertitta’s CFO and general counsel, respectively, were unanimously approved by the board Wednesday and will go before the Nevada Gaming Commission for final consideration 23 July.

Both men have been close associates of billionaire Tilman Fertitta, who is currently away from the business while serving as US ambassador to Italy and San Marino, for many years. Scheinthal began working with Fertitta in 1988 and Liem joined in 1999. They reiterated this week that the ambassador is separated from day-to-day activities, with the two of them along with his wife, Paige Fertitta, composing the company’s board since his departure.

Liem and Scheinthal are no stranger to Nevada’s gaming market, having been licensed in the state since 2005 when Fertitta first acquired Golden Nugget Casinos. Their most recent appearance before the board was in 2023, when Golden Nugget took over the former Hard Rock Lake Tahoe.

While there was discussion about the details of the transaction, board members were first concerned with compliance. Caesars was fined $7.8 million last year for anti-money laundering violations related to illegal bookmaker Mathew Bowyer, who has since been banned from Nevada casinos. Scheinthal asserted that Fertitta and Golden Nugget have “never had an issue” with integrity.

“We understand the importance of compliance…Everybody knows what the repercussions are in connection with not following the rules and regulations,” he told the board.

Antitrust, gaming licences top priority

With regard to the Caesars acquisition, Scheinthal laid out the various hurdles that must be cleared for the transaction to close, which looks likely to take about a year or more. The all-cash deal is worth a total of $17. 6 billion — $5.7 billion in equity and $11.9 billion in assumed debt.

The first two priorities are antitrust filings and gaming licence approvals in all of Caesars’ jurisdictions, Scheinthal said. Fertitta will file a Hart-Scott-Rodino antitrust application to the Federal Trade Commission by 13 July, and that is followed by an initial waiting period of 30 days. In the meantime, the company has divided the gaming licence applications into two groups based on expected lead times. The first round of applications will be completed this week and 45 days have been allotted to file the rest.

“We think that probably will take nine to ten months from today in order to get that approval,” Scheinthal said.

As Caesars is a public company, it also must file a proxy statement and obtain shareholder approval. Caesars held its annual meeting 9 June and will publish second-quarter results 28 July without hosting a call with analysts.

Looking for a hotter money market

Another notable consideration discussed Wednesday was financing. Scheinthal said that while Fertitta has a commitment letter from “a syndicate of banks to finance the transaction”, they’d prefer to find better terms on the open marketplace, but that is somewhat of a gamble in a high interest rate environment. The US Federal Reserve held interest rates steady in June and sentiment for future cuts this year are fading in the face of sticky inflation and economic fallout from the US-Iran war.

“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,” he said.

The Caesars deal includes a go-shop window through 11 July. Carl Icahn, the billionaire investor who spearheaded Caesars’ previous acquisition by Eldorado Resorts and still controls two of the company’s 10 board seats, reportedly has last-minute interest in a liability management exercise and is gauging interest in a $5 billion debt financing package. However, the Caesars board is said to favour the Fertitta deal because of its “firm” financing, according to CNBC.

“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.

Will Fertitta retain stake in Wynn Resorts?

One other topic board members inquired about was Fertitta’s stake in competitor Wynn Resorts. The entertainment mogul is Wynn’s largest shareholder, with a 12% stake. Wynn is down more than 19% this year and is expecting delays to its much-anticipated UAE resort due to the regional conflict.

When asked by board member George Assad when the stake might be sold, Scheinthal seemed surprised, and said there is “no reason to believe” there are any regulatory issues with 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 said.