Caesars Entertainment has embarked on a wide-scale downsizing campaign in preparation for the company’s merger with Eldorado Resorts next year. The deal is expected to close in the first half of 2020, while some analysts are tipping it could be done by the end of the first quarter.
A major aspect of the $17.3 billion buyout was an agreement that Eldorado would look to save $500 million by making various cuts to Caesars’ operating budget. Around $40 million has already been trimmed, while another $75 million to $100 million is expected to go before the deal becomes official.
“On October 10, 2019, in an effort towards achieving greater operational efficiency, the Company initiated a Voluntary Severance Program (VSP),” Caesars said in a recent filing to the Securities and Exchange Commission (SEC).
“The VSP was offered to non-property, US-based corporate employees in management roles, as defined by the program, excluding certain revenue focused departments. The process for eligible employees to volunteer and be accepted was completed on October 28, 2019.
“We expect to record severance and stock compensation charges of up to $20 million during the fourth quarter related to this program.”
Caesars did not show the positions of management that were trimmed and made no mention of other areas where cuts might occur. Also, the firm did not pinpoint at which properties the cuts would be made.
It is expected that Eldorado will shed several Caesars assets in order to cut costs and generate cashflow, which could see two or more of the latter company’s Las Vegas Strip casinos closed. Caesars’ Atlantic City properties will also come under scrutiny.