Eldorado-Caesars merger to result in job cuts, new Caesars CFO says

"We remain focused on creating substantial synergies as we bring together these two companies," Chief Financial Officer Bret Yunker said. "That will, unfortunately, result in some job reductions. Reducing the size of a workforce is always challenging to go through. We commit to do that as compassionately and transparently as possible."

As reported by Las Vegas Sun, Yunker, who served as CFO with Eldorado and now with the new Caesars Entertainment, wasn’t specific about how many jobs would be eliminated or where the reductions would happen.

Before layoffs resulting from the coronavirus pandemic, Caesars had about 30,000 employees in Las Vegas and about 65,000 worldwide. Eldorado had about 18,000 workers.

Eldorado, a Reno-based company, announced Monday it had completed the $17.3 billion deal to acquire Caesars, making it the biggest gaming company in the world. The merged company owns and operates more than 55 casinos in 16 U.S. states, including eight resorts on the Las Vegas Strip.

Yunker said he hoped the “strength of the combined portfolio” would help the company continue to reopen casinos shuttered during the pandemic.

In Nevada, Gov. Steve Sisolak ordered all casinos closed in mid-March to help curb the spread of the virus. They were allowed to start reopening June 4.

“We have Bally’s coming open later this week (Thursday), so we’ve been doing whatever we can to open properties in Las Vegas and in Nevada to help bring employees back to work,” Yunker said.

Two other Caesars properties on the Strip, Planet Hollywood and the Cromwell, remain closed. The Rio, just west of the Strip, has also not resumed operations.

While the coronavirus has wreaked havoc on the tourism industry, decimating casino revenues, Yunker said Eldorado never thought about backing away from the deal.

“When you’re in that scenario, you have to think of everything, but we never paused,” Yunker said. “The strategic rationale of the merger, in any scenario, was always going to make sense to us.

“In the interim, it’s going to be challenging,” Yunker said. “Once we get to the other side of this, Las Vegas is as unique as it gets. We’re totally bullish on Las Vegas.”

The company has about $13 billion in debt, along with additional obligations to VICI Properties and another real estate investment trust, Yunker acknowledged.

But both companies “came into the merger pretty under-leveraged, which was good,” Yunker said. “Yes, there is some incremental leverage as part of the transaction, but, having been around the industry and executed hundreds of gaming credit transactions, I saw a battleship portfolio that will generate cash flows through thick and thin. 

“We also created an abundance of liquidity to deal with any operational uncertainty in the near term. Our portfolio of properties, balance sheet and liquidity are going to see us through to the other side,” he said.

As Eldorado officials have mentioned previously, Yunker said it’s possible the new company might sell a Las Vegas property.

“We’ve been talking about it since announcing the transaction last June, but there’s no real update,” Yunker said. “We’ve had a view that managing over 20,000 rooms, just from a strategic perspective, isn’t ideal for the combined company. We’re still going to be thinking through when the right time is to potentially divest one Strip asset, likely in the next 12 to 18 months. Some of that will be driven by what’s happening in the world, in Las Vegas and with the virus.”

As part of the merger approval, the Federal Trade Commission required Eldorado to sell properties in Lake Tahoe and Shreveport, Louisiana, to avoid antitrust issues.

Earlier this year, Eldorado also agreed to sell casinos in Mississippi and Missouri. Indiana regulators required the sale of three casinos for the merger to go forward.

The combined company retains the Caesars name and stock symbol, though it introduced a new logo on Monday.

“Caesars is the iconic brand in gaming. There’s a reason why we’re changing our name, because you can’t find a better name in gaming,” Yunker said.

The new company will focus on the “family-style service” that has been a trademark since the late Don Carano opened the Eldorado Hotel Casino in Reno in 1973, Yunker said.

Carano’s son, Gary Carano, is executive chairman of the merged company’s board of directors, which includes a mix of former Eldorado and Caesars board members.

Anthony Carano, Gary’s son, is chief operating officer for the new company, a title he held with Eldorado. Tom Reeg, also from Eldorado, is the company’s new CEO, though former Caesars CEO Tony Rodio is staying on in an advisory role.

The new Caesars corporate headquarters will be in Reno, though there will be a large corporate presence in Las Vegas, Yunker said.

Billionaire investor Carl Icahn is now the largest single shareholder of the company, owning more than 10% of the new Caesars. Ichan acquired a large block of old Caesars shares after the company emerged from bankruptcy protection in late 2017.