(Bloomberg) – Enthusiastic American gamers who quickly returned to casinos after the Covid-19 shutdown helped Eldorado Resorts Inc. sell nearly $ 8.8 billion in debt and shares needed to complete its acquisition of Caesars Entertainment Corp.
Eldorado’s Tom Reeg, who is now CEO of the combined company, said he never questioned whether to go ahead with the deal, which was worth $ 17 billion when it was announced last year, even after the coronavirus closed all casinos. in the country for three months.
“It continued to make business sense, our financial commitments were solid,” Reeg, 49, said in an interview Monday when the purchase closed. “We knew that we could finance the transaction. We had already worked so hard in synergy, starting to think about integration; it was clear that there were even more opportunities than we thought. “
The Federal Reserve helped the company sell the loans by pushing official interest rates to near zero, Reeg said. The casinos’ first strong results, which began reopening in May, also gave a boost.
“Clients were effectively trapped in their homes for three months,” said Reeg, who has been with Eldorado for almost a decade. “They were eager to get out and entertain themselves. They were looking for places they could go, drive, go home to. It was perfect for regional casinos. “
Eldorado, which will adopt the Caesars name, sold $ 8 billion in junk bonds and other debts, and $ 772 million in new shares last month to finance the deal and shore up its balance sheet. The acquisition made Reno, Nevada-based Eldorado the largest casino operator in the United States, with some 55 properties in total.
Although casinos have had to limit the number of guest players at slot machines and tables to comply with social distancing rules, the returning visitors have been high-level gamblers who bet more, Reeg said. They are also less affected by the loss of jobs related to the virus and the business slowdown that affects the economy.
Combined, Caesars and Eldorado lost about $ 1 billion in the second quarter due to virus-related closings, Reeg said. Profitability since its reopening has increased because Caesars is not offering some money-losing amenities like buffets and entertainment.
Reeg is now seeking the sale of several American and international casinos, including three that Indiana casino regulators ordered him to divest. You have seen “significant unsolicited interest” in those properties from other casino operators.
The new Caesars is also looking for a possible initial public offering of shares in the company’s online and sports betting business, which could help reduce the company’s $ 14 billion loans.
“The idea is to somehow highlight the value of that business,” Reeg said. He described it as “similar on a scale and revenue point of view to DraftKings”, though “stuck with a much larger casino operator.”
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