Eldorado Resorts Has Risky Plan for Caesars Entertainment Buyout
When Eldorado Resorts (NASDAQ: ERI) announced its plan to acquire Caesars Entertainment (NASDAQ: CZR) back in June, it felt eerily familiar to those of us who have watched the casino industry for a long time. The last big buyout was the private equity takeover of Harrah's in 2007, which ironically became Caesars Entertainment. That deal piled on $21 billion of debt and ultimately led to the bankruptcy of Caesar's biggest subsidiary and the reorganization of the entire company.
Eldorado is taking on a total debt load of about $15.5 billion, which is even higher than it may seem because the company has already sold off most of its real estate -- which Harrah's hadn't in 2007. The final deal sounds strangely familiar to the disaster that ultimately befell Harrah's.
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