Caesars IPO “the dumbest thing”; Fertittas seek majority control in Station Casinos

caesars-station-south-point-casinoCaesars Entertainment’s re-entry into the public markets was a smashing success, with the $9 shares rising as high as $17.90 before closing at $15.39. The pace of the trading was hectic – the volume of shares shifted was triple that of the 1.8m shares on offer – but while brokers were well pleased by the multiple commissions they earned, analysts were left scratching their heads, wondering why investors seemed unaware that the other shoe had yet to drop. With the IPO out of the way, shareholders are preparing to dump as many as 34.7m shares onto the market (and as much as 100m more in six months time), leading Sterne Agee & Leach analyst David Bain to tell Bloomberg: “Where shares trade today is likely not a good benchmark for future Caesars valuation.” CNBC’s Gary Kaminsky put it more succinctly, calling the IPO “the dumbest thing I’ve ever seen.”

Shares in Station Casinos are also on the move. Minority owners Frank Fertitta III and Lorenzo Fertitta want to buy out JP Morgan Chase Bank’s 15% stake for $73m, via a Fertitta-affiliated company, FI Station Investor LLC. The deal would give the Fertittas, who currently hold 45% ownership in Station, majority ownership of the company founded by their pop, Frank Fertitta Jr. Station filed for bankruptcy in 2009 after amassing $6b in debt, exiting bankruptcy in June 2011, with outstanding debts of $2.5b as of Dec. 31. (Caesars execs must laugh, considering they owe $1.5b just in interest on their $19.6b debt.) JP Morgan acquired their 15% stake by converting debt to equity during the bankruptcy proceedings. Station recorded earnings of $284m in 2011, and the brothers’ Fertitta Interactive offshoot has applied to the Nevada Gaming Control Board to become an online poker operator.

Another Nevada online poker applicant, South Point Casino, was the subject of its own Travel Channel TV reality show on Wednesday night. Vegas Stripped is a six-part, half-hour show professing to show the warts-and-all details of what it takes to keep a brick and mortar casino in the black these days. South Point’s marketing director Tom Mikovits described the show as “an inside look at what it takes to run a casino. You’re going to see what happens in the butcher shop or on the loading dock, stuff people don’t normally see.” Tom, you want to show us something we haven’t seen, show us your real motivation for keeping up with the Kardashians. “We were comfortable being a locals’ casino, but having a brand like, that’s something we want to get out nationally.” Naked ambition, shameless hucksterism and honesty… Most reality shows only offer you the first two. You’re a good man, Tom.