Capital Allocators – Inside the Institutional Investment Industry Max Frumes and Sujeet Indap –Inside the Sausage Factory of the Caesar’s Restructuring (Capital Allocators, EP.209)
Aug 16, 2021
Max Frumes and Sujeet Indap, seasoned financial journalists and co-authors of "The Caesars Palace Coup," delve into the tumultuous bankruptcy of Caesars Entertainment. They reveal the intricate negotiations among top hedge funds and creditors, shedding light on the power dynamics at play. The duo discusses the blend of luck and skill in distressed investing, offering lessons for investors navigating similar waters. They also reflect on their journey from finance to journalism and share insights on the ethical shifts within the investment landscape.
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Harrah's Transformation
- Harrah's, a regional casino chain, transformed into a national powerhouse using a customer loyalty program.
- This program, called Total Rewards, leveraged customer data to offer targeted promotions, driving growth and acquisitions.
Pre-Crisis Capital Structure
- Caesars Entertainment's pre-crisis capital structure consisted of $6 billion in equity and $24 billion in debt.
- The debt included bank loans, high-yield bonds, and a mortgage-backed Propco financing.
Post-Crisis Maneuvering
- During the financial crisis, Caesars employed tactics like debt exchanges and refinancing to manage its debt.
- Apollo and TPG, Caesar's owners, created new entities to buy assets from existing Caesars properties, aiming to protect them from bankruptcy.
