NGC approves Caesar's spinoff of Planet Hollywood and Caesar's Interactive (WSOP)

Sell the growth-parts of the business in a new stock holding for $1.18 billion, keep all control and ownership, and then profit!

Interactive was growing because of the WSOP, and I remember reading elsewhere that Playtika was also doing well. Includes a Baltimore-area casino that hasn't been built yet.

I think Las Vegas Review Journal is the newspaper that sues random people posting their articles for copyright infringement, so I'll play it safe and just link to the article.

http://www.reviewjournal.com/business/casinos-gaming/gaming-commission-oks-plans-caesars-spinoff

 

I had said before when this was brought up that the stock holders of CZR are going to get screwed on this deal big time......if I owned stock I would be lawyering up right about now

this is nothing but insiders walking away with the best parts of the company and leaving the dying and decaying crap to rot on the vine

CZR would be a good short in the near future as it is probably heading to zero

 

Wow! This is horrible. I can't believe they would screw their stock holders like that! Can you say Enron?

 

Someone, was this thread posted already? I searched for spinoff, and I think Planet Hollywood too, in this section and a few others - couldn't find a thread.

eta: oh, and I think with the 5 year buyback option, if Caesar's filed for bankruptcy and somehow made it out intact within 5 years, they still own this spinoff company and could purchase it back after bankruptcy. I'm not entirely sure that's even legal.

 

Really you can't believe it? This has been part of the private equity model for decades. I've worked with a lot of PE guys and some of my friends are in the business. Never invest in a PE controlled company unless you're completely pari passu with the partners, otherwise you're almost guaranteed to get shafted. It's one of the biggest rackets on Wall Street.

 

it was not that particular story that had been posted before, but there had been a mention before of CZR getting private equity and busting off part of the company

https://www.vegasmessageboard.com/forums/showthread.php?t=92462&page=2

and I would be more inclined to believe that if CZR goes under what will happen is the holders of CZR debt will get a very diluted portion of the spin off company and the remainder (and controlling) interest in the spin off company will be held by the "private (non) equity investors" and the insiders

so IMO when it is all said and done the "private (non) equity" "investors" will have about 70% of a company worth 1.18 billion for a 500 million investment and probably less than that in actual cash and if the value of the company goes up over the next few years they will dump it for well more than 1.18 billion

the article (extremely poorly written as is all that passes for journalism today) states the company will issue 125.4 million shares @ $9.43 per share so that is $1,182,522,000 right there and then CZR and the "private (non) equity investors" will put in $500 million as well and will have 70% of the company

at the beginning of the article it states the "separate company will be majority owned by the gaming giant" but then of course later on it says that CZR and the two (non) equity investors will have 70% control and it makes no mention of who CZR vs TGP vs Apollo will have what % of that 70% even though from the above quoted statement at the beginning of the article it makes it sound as though CZR will have enough of that 70% to own at least 51% of the entire new company which would mean that CZR would need to own 72.86% of the 70% in order to own 51% of the entire company

when the reality is CZR will probably toss in $135.7 million, TGP and Apollo will toss in $182.15 million each and CZR will get 27.14% of the 70% and TGP and Apollo will get the other 72.86% of the 70% which would give TGP and Apollo 51% of the entire company and CZR 19% of the entire company and the people that buy shares for $9.43 30% of the whole company

so people that buy 125.4 million shares of the company for 1.18 billion and change will get 30% of a company and TGP and Apollo will get 51% of a company for $364.3 and CZR will get 19% of the company for $135.7

but the real joke (as if that is not bad enough) is that the people eligible to buy those $125.4 million shares are already investors in CZR and worse CZR will almost surely be tossing in that $135.7 million like I am outlining so the people buying those 125.4 million shares are really paying more than $9.43 per share because they are watching a company they are part owner of toss in cash into the deal while "(non) equity investors" toss in the least cash overall between any of the groups and walk away with a controlling 51%

so when CZR explodes into pieces the shareholders and debt holders (the share holders will get nothing and like it) will all get to fight over 19% of the company that CZR owns controlled 51% by TGP and Apollo and 30% by chumps that paid to watch a chunk of a company they already own get handed off along with some cash to (non) equity insiders

as long as the new company is worth about $730 million or more at any time TGP and Apollo will break even or better and if it is worth well over that they make a mint.....and since it is taking assets that are suppose to hold the most value PHY and the WSOP and the newest casino AND selling shares for 1.18 billion it should always be worth well over $730 million.......hell PHY alone is probably worth more than half of that and the WSOP is probably worth close to half of that and the new casino who knows, but the break up value or sell off value of the new company should remain well above 2X what TPG and Apollo paid for 51% of it which IMO will be about $364.3 million between the two of them

I suppose one could possibly profit on this if they were able to own a single share of CZR and buy many more shares of the new company for the $9.43 and then sell out right as the "pump" is going on before the "dump" happens.........you would be dividing the dollar amount of a single CZR share that you know is heading to zero over the number of shares in the new company that you buy for $9.43.......now if it is only allowed on a one to one ownership basis talk about having your head lopped off haha......you can add the cost of each CZR share (going to zero) to the $9.43 and that will NEVER get above water unless CZR somehow turns it around with it's most valued assets stripped away

 

I bet that some CET executives will also get huge bonuses, probably in stock for consummating such a "shrewd deal". The C-level folks at my company all got millions of dollars when we sold out to a Japanese firm. It made me sick.

 

it better be stock in the new company or CZR shares that can be liquidated immediately or they might as well give them a wall plaque because that is all the CZR shares will be worth by the time the sales restrictions end

 

They will. It's usually the only way PE firms can get deals done nowadays and Loveman is no idiot.

 

i dont understand does this mean planet hollywood is not going to be part of cet anymore and we cant use our cet comps there??? i am planning to stay either there or ceasars next month but dont want to stay at planet hollywood if its not going to be a cet casino anymore because i want to build my comps on total rewards not some new company. it is still on the website as part of ceasars and i am confused cos cet was just talking about planet hollywood being there next nicest hotel in vegas after ceasars palace.

 

These games remind me of the shady dealings (pre/post bankruptcy) by the human cockfighting promoters at Stations. The CET public offering was nothing but a scheme for insiders to cash out.

 

casinoboy, you should be ok, it hasn't been approved by the SEC yet, and it hasn't been spun off yet, and Caesar's still controls Planet Hollywood after this. If Caesar's entered bankruptcy, there's really no telling what would happen to each of its properties.

PE has ruined many a great name brand retailer like Mervyn's or Linens N' Things, loading them with debt right before the great recession.

What I don't really understand is how they can take over profitable giants like First Data, then the entire company becomes unprofitable, then the PE shop is still alive? I thought its called a buy-out. Screwy, imo.

 

The reason executives get payouts during buyouts has to do with restricted stock awards. ALL executives of ALL major companies get 50%+ of their income from company stock. These stock awards are in their contracts and "vest" over multiple year periods and can only be cashed in after a certain amount of time. When a company is bought out, those shares become 100% vested, and the new company has to buy their share. That's why you see large figures, it reflects multi-year compensation being paid out at once.