Bill Walczak, candidate for mayor of Boston, today released a scathing report on Caesars Entertainment and its business practices. The report outlines the business practices the company utilizes to hold down wages, stymie efforts for employees to qualify for benefits, usurp host city agreements, and carries what the Wall Street Journal’s classifies as a unsustainable debt load that has brought its shares near junk status.
“Boston is being sold a bill of goods by a company on the brink of financial ruin,” said Walczak. “With no real enforcement mechanism in place for all that is outlined in the host community agreement, Caesars can decide just not to fulfill its promises.”
Bill Walczak campaign’s investigation into Caesars Entertainment finances revealed:
· Caesars, the operating partner of the Boston casino, is struggling under a heavy debt load of $24 billion and that the Wall Street Journal characterized their capital structure as unsustainable.
· Analysts say that Caesars must restructure its debt by 2015, before a casino in Boston would open.
· Despite their efforts to cut costs, buy back debt, and pursue a spinoff transaction during the second quarter of 2013, Caesars debt load is still the “elephant in the room and could push them into Chapter 11” reports The Deal Pipeline.
· Caesars’ private equity owners, Growth Partners, plan to split the company to separate its most valuable assets from debt-encumbered assets.
“There are no guarantees with this company and in this agreement,” said Walczak. “If Caesars is sold or split, who will Boston hold responsible for the promises outlined in the host community mitigation agreement?” “How can we trust Caesars given these facts and their track record?” asked Walczak. “The answer is we can't.”
"We need full transparency of the deal, said Walczak, " it is bad enough
that one investor Vornado is hiding behind a trust and avoiding a background
check and now the Casino operator has huge financial problems and nobody has told the public"
Walczak questions the transparency, enforceability, and viability of the supposed gains for the city, which were outlined in the recently negotiated host city mitigation agreement. The financial reality of Caesars raises many questions including:
- Given Caesars dire financial situation, will it have the capacity to lead development and manage operations for the Suffolk Downs casino in the near and long term?
- In the event of bankruptcy or restructuring of the company, are the commitments made by Caesars enforceable by any government body?
- Who will build and run the Suffolk Downs casino if Caesars fails?