Jefferies Financial Group Inc. has been contacting investors to test demand for approximately $5 billion in debt financing that could be deployed to support a potential takeover effort led by billionaire investor Carl Icahn, people with knowledge of the matter told reporters.
The outreach aims to build creditor backing for Icahn’s possible counteroffer for Caesars Entertainment Inc., which follows Tilman Fertitta’s agreement in May to acquire the casino operator in an all-cash transaction valued at $5.7 billion. That deal includes a go-shop period that runs through July 11, giving Caesars an opportunity to consider competing proposals.
According to the people, Jefferies has specifically been approaching existing creditors of Caesars to secure support for the financing component of Icahn’s proposal. The potential bid being discussed from Icahn is $33 per share, which is higher than Fertitta’s $31-per-share proposal that Caesars previously accepted.
Under the plan described by the people, Icahn’s approach could make use of covenants in Caesars’ debt agreements that permit assets to be moved into a subsidiary vehicle, a structure that would separate those assets from the company’s current creditors. The sources cautioned that the plan is not final and remains subject to change, and that no definitive decision has been taken to proceed.
Icahn, who has long held interests in the casino sector and played a role in the 2020 merger between Caesars and Eldorado Resorts Inc., also has representation on Caesars’ board through two directors. He initiated the buyout talks with the company and currently has an offer on the table that would top Fertitta’s bid.
Markets reacted to the news: Caesars Entertainment shares rose 0.7% before the close and added another 0.6% in after-hours trading, according to the reporting.
Key points
- Jefferies is canvassing investors to raise about $5 billion in debt to support Carl Icahn’s potential bid for Caesars Entertainment.
- Carl Icahn has proposed $33 per share, above Tilman Fertitta’s $31-per-share offer; Fertitta’s $5.7 billion all-cash agreement includes a go-shop period through July 11.
- The contemplated plan could shift assets into a subsidiary under existing covenants, which would separate those assets from current creditors.
Risks and uncertainties
- The financing and takeover plan remain preliminary and subject to change; no final decision has been made - this affects capital markets and creditors connected to Caesars’ debt.
- The proposed asset-transfer structure relies on covenants and could materially alter the claims of existing creditors if implemented - impacting lenders and the broader credit market linked to casino operators.
- Market reaction may evolve as details and creditor support emerge; share-price movements could continue in both regular and after-hours trading sessions.