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Landry's Tilman Fertitta considering an IPO

Discussion in 'Casino Industry & Development' started by hammie, Jan 8, 2021.

  1. hammie

    hammie VIP Whale

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    This is a month old, but Tilman Fertitta is looking to sell off part of the Casino and Restaurant business in an initial public offering according to a CNBC article.

    The article also mentions that he is taking Golden Nugget Online Gaming company public.
     
    • Informative Informative x 1
  2. Elizakess

    Elizakess Low-Roller

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    What Tillman is doing is the same as what Riklis of Riv Casino fame did who pioneered the technique and it is taught as a business technique in university. You can see a similar technique in selling casinos to the REITs. Assets that have a positive cash flow are sold to the new company usually providing operating capital to the debt ridden initial company. This allows a positive cash flow to be created at the new company making it stronger. It opens up lines of credit etc to the new company not available to the old based on the positive cash flow. In the long run the Bottom line of the initial company is reduced due to removal of generating assets. The choice usually is for the stronger to buy the weaker or to sell off the remaining assets of the original company or to file for bankruptcy in the initial company resulting in a sale of assets or a stronger less debt ridden company. All of the options discharge crippling debt and keep people employed. It’s a smart move for Tillman.
     
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  3. ACSCLE

    ACSCLE Low-Roller

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    Not surprising with how he's ripping apart the Houston Rockets to save money.
     
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  4. hammie

    hammie VIP Whale

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    I read an article that said he pulled $1.7 Billion out of his company to buy the Rockets for $2.2 B.

    Basketball, Casinos, and Restaurants......I guess the good news is that he doesn’t own an airline.
     
  5. ACSCLE

    ACSCLE Low-Roller

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    I don't understand why you would purchase a business and immediately start cutting costs as if you don't have enough money to run it regularly (and competitively). He could have found a partner to invest in the team and be under a lot less financial obligation.
     
  6. hammie

    hammie VIP Whale

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    Covid-19 caught everyone by surprise, I don’t think any business owner could have planned for this pandemic. He looked around for other financing, but I’m sure lenders wanted terms that were not favorable, so he is looking to sell off 49% of his casino and restaurant business.

    Of course the business is coming back in 2022 according to Tillman, his fish is fresh!
     
  7. Elizakess

    Elizakess Low-Roller

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    No reasonable business can go a year with such reduced capacity without having some money issues. Their money is tied up and not accessible easily. At the time of purchase the Rockets an apparent childhood dream of his it made sense as an investment and would likely have paid off had it not been for the interruption. You can shut a business and not pay salaries but you owe the rent still to keep the location and things like electricity and other fixed expenses. Those that remained open are what is keeping the others afloat but it’s not nearly the usual business one gets. A big expenditure would be debt maintenance. He has loans out there that still have to be paid. The Rockets would likely represent only one of such loans.
    I don’t believe anyone would have realized how long this would go on and there is no answers to how long it will continue as even when over it will take time to recover as with other economic downturns in the past.. It will eventually return to normal and a business has to outlast it or close and recreate down the road. Closing would not pay his debt maintenance. This represents a way to survive. It buys him time. It buys him options should things not go the way he plans by separating the assets. Tillman has always been a very smart businessman.