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Archive for March 3rd, 2019

Icahn-Named Directors Join Caesars’ Board; Is the Company Succumbing to Sale Pressure?

A sale of Las Vegas casino and hospitality giant Caesars Entertainment Corp. seems more and more likely by the day as an investor with a history of shareholder activism is pressing for the move as a plausible next stage in the company’s development.

Caesars announced yesterday that it has submitted to the latest demands of Carl Icahn and has reached an agreement with him to appoint three new members to its Board of Directors, all three named by the billionaire investor himself. Last month, Mr. Icahn said in a filing with the US Securities and Exchange Commission that he has amassed a 9.78% stake in Caesars, confirming reports abut his involvement in the company that floated around for several months.

The businessman’s filing read further that he believed an outright sale or a merger with another entity was a viable option for enhanced shareholder value to be considered by the company’s management.

Caesars said yesterday that as a result from its agreement with Mr. Icahn regarding the “membership and composition of the company’s Board of Directors”, Keith Cozza, Courtney Mather, and James Nelson were appointed as directors with immediate effect. Three members of the Board stepped down following the director appointments.

Under the terms of the deal between Caesars and Mr. Icahn, the latter has the right to appoint a fourth director if “a new Chief Executive Officer who is acceptable to new directors is not named within 45 days” of the agreement.

Mark Frissora currently serves as CEO of Caesars. The executive and the company announced last year that he was to step down in February. However, it later on became known that he would stay with the hotel and casino operator for a little longer.

Icahn Still Pushes for Sale

In a statement issued by Caesars on Friday, Mr. Icahn said that he considers a sale or merger of the company as the “best path forward” for it to “further develop its already strong regional presence.” The New York billionaire investor further pointed out that Caesars “would be a great opportunity for certain investors who have already expressed interest” in it.

This is a mere suggestion, but Mr. Icahn might have referred to Golden Nugget owner Tilman Fertitta as the interested investor. Last fall, Mr. Fertitta approached Caesars with an offer to buy the company and combine it with his own hotel and casino empire. Caesars rejected that offer, but reports emerged earlier this year that the Texas businessman’s appetite for the gaming and hospitality behemoth has not faded away.

Mr. Icahn further said yesterday that Caesars should also focus its attention on “leadership succession, disciplined capital allocation, improving operating performance, and optimizing real estate and other assets.”

Carl Icahn is a familiar, and, as many would say, and important figure in the US land-based casino industry. His name and his investment activities can be linked to a number of casino properties both in East Coast gambling mecca Atlantic City, including Tropicana and Trump Taj Mahal, and West Coast casino paradise Las Vegas, including The Stratosphere and the unfinished Fontainebleau.

Many identify Mr. Icahn’s investment strategy as vulture capitalism in its purest form. The businessman has faced quite some criticsm for his investment tactics over the years. And it should also be noted that he has a history of selling businesses at a huge profit.

As to why he has developed such massive interest in Caesars, it is yet to be seen. But the company is clearly facing greater pressure to sell itself and it seems more and more likely that it might eventually succumb to that pressure.

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The post Icahn-Named Directors Join Caesars’ Board; Is the Company Succumbing to Sale Pressure? appeared first on Casino News Daily.

Churchill Downs Gets Regulatory Approval for Rivers Casino Des Plaines

Churchill Downs gets regulatory OK to buy Rivers Casino Des Plaines, the deal is expected to be closed next week

Churchill Downs Inc. received on Friday regulatory approval to acquire a majority stake in Rivers Casino Des Plaines in the Chicago area. However, the casino and racetrack operator will have to find female and minority investors in the property in order to be able to complete the deal, news outlet the Daily Herald reports.

Churchill Downs originally announced plans to buy a 50.1% stake in Rivers Casino’s parent company Midwest Gaming Holdings last fall. The Kentucky operator expected to pay around $326 million for the lion’s share of the top-performing casino in the state of Illinois.

As Casino News Daily reported last weekend, the state Gaming Board announced yesterday their decision about the proposed transaction. Members of the regulatory body voted 4-0 in favor of the transaction. It became known that Churchill Downs has decided to up its investment in Rivers Casino to nearly 62%.

The Illinois Gaming Board pointed out during its Friday hearing that female and minority ownership interests would drop from 17% at present to under 3% once the transaction is closed because most of the female and minority investors are selling their holding in the casino to Churchill Downs. As part of the deal, the company has agreed to sell up to 10% of Midwest Gaming to female and minority investors within 90 days.

Deal to Be Closed Next Week

Commenting on yesterday’s positive vote, Churchill Downs CEO Bill Carstanjen said that they expect to finalize the deal on Tuesday. The official further pointed out that Rivers Casino in Des Plaines is one of the most dynamic and successful properties in the whole of the United States.

Churchill Downs expects to pay $407 million in cash for the majority stake in the casino’s parent company. As mentioned above, the casino and racetrack owner is buying a nearly 62% stake, up from the initial plan for a 50.1% stake. Mr. Carstanjen said that additional investors agreed to sell their interest.

Rivers Casino will keep its Chairman and CEO after the transaction is complete. Illinois businessman Neil Bluhm will continue serving as Midwest Gaming’s Chairman, while Greg Carlin will retain his CEO role.

Mr. Bluhm told the Illinois Gaming Board yesterday that if Churchill Downs had not made its offer and Midwest Gaming had sold its entire interest in Rivers Casino to another business, that would have resulted in significant job terminations. The businessman went on to say that their team is important to them and that the transaction would not affect the casino’s staff.

Churchill Downs is adding a full-scale casino with 983 slot machines and 58 table games as well as multiple non-gaming amenities to its portfolio. The company currently operates Arlington International Racecourse in suburban Chicago. Churchill Downs has been trying to get slot machines and other gaming options at the racetrack for years now, but has been unable to do so due to regulatory hurdles.

The company has previously said that it has developed interest in Rivers Casino not only because it is Illinois’ top-performing gambling venue, but also because of the possibility for the state to legalize sports betting and online gambling.

Last week, Illinois Gov. J.B. Pritzker added the legalization of sports gambling to his budget plan for the upcoming financial year. It is to be seen whether the state Legislature would act on betting this session.

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The post Churchill Downs Gets Regulatory Approval for Rivers Casino Des Plaines appeared first on Casino News Daily.


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