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424B3 Form - Prospectus [Rule 424(b)(3)] - Eldorado Resorts, Inc. (0001590895) (Filer)

424B31d794670d424b3.htm424B3424B3
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Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-233591

 

 

LOGO LOGO

100 West Liberty Street, Suite 1150

Reno, Nevada 89501

 

One Caesars Palace Drive

Las Vegas, Nevada 89109

October 11, 2019

PROPOSED MERGER—YOUR VOTE IS VERY IMPORTANT

To the Stockholders of Eldorado Resorts, Inc. and Caesars Entertainment Corporation:

On June 24, 2019, Eldorado Resorts, Inc., a Nevada corporation (“ERI”), and Caesars Entertainment Corporation, a Delawarecorporation (“Caesars”), entered into an Agreement and Plan of Merger (as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of August 15, 2019, and as it may be further amended from time to time, the“Merger Agreement”), pursuant to which ERI will acquire Caesars. The Merger Agreement provides for a business combination in which a wholly owned subsidiary of ERI will merge with and into Caesars (the “Merger”), with Caesarscontinuing as the surviving corporation and a direct wholly owned subsidiary of ERI. In connection with the Merger and subject to stockholder approval, ERI expects to change its name to Caesars Entertainment, Inc.

In the Merger, the aggregate consideration paid by ERI in respect of outstanding shares of common stock of Caesars (“Caesars commonstock”) will be (a) an amount of cash equal to (i) the sum of (A) $8.40 plus (B) if the applicable closing conditions set forth in the Merger Agreement are not satisfied by March 25, 2020, an amount equal to $0.003333 foreach day (provided that such amount will not be payable if the waiting period under the HSR Act has expired or been terminated but (to the extent required) the consents of the holders of Caesars’ 5.00% convertible senior notes due 2024 have notbeen obtained) from March 25, 2020 until the closing date of the Merger (the “Closing Date”), multiplied by (ii) a number of shares of Caesars common stock (the “Aggregate Caesars Share Amount”) equal to(A) 682,161,838 (which includes 8,271,660 shares being held in escrow trust to satisfy unsecured claims pursuant to the Third Amended Joint Plan of Reorganization, filed with the U.S. Bankruptcy Court for the Northern District of Illinoisin Chicago on January 13, 2017, at Docket No. 6318, which shares are not entitled to vote) plus (B) the number of shares of Caesars common stock issued after June 24, 2019 and prior to the effective time of the Merger pursuant tothe exercise of certain equity awards issued under Caesars stock plans or conversion of Caesars’ outstanding convertible notes (the “Aggregate Cash Amount”) and (b) a number of shares of common stock of ERI (“ERI commonstock”) equal to 0.0899 multiplied by the Aggregate Caesars Share Amount (the “Aggregate ERI Share Amount”). Each holder of shares of Caesars common stock will be entitled to elect to receive, for each share of Caesars common stockheld by such holder, either an amount of cash or a number of shares of ERI common stock with a value (based on the ERI Common Stock VWAP, as defined below) equal to the Per Share Amount. The “Per Share Amount” is equal to (a) (i) theAggregate Cash Amount, plus (ii) the product of (A) the Aggregate ERI Share Amount and (B) the volume weighted average price of a share of ERI common stock for a ten trading day period, starting with the opening of trading on the 11thtrading day prior to the anticipated Closing Date to the closing of trading on the second to last trading day prior to the anticipated Closing Date (the “ERI Common Stock VWAP”), divided by (b) the Aggregate Caesars Share Amount.

Elections by Caesars stockholders are subject to proration such that the aggregate amount of cash paid in exchange for outstanding shares ofCaesars common stock in the Merger will not exceed the Aggregate Cash Amount and the aggregate number of shares of ERI common stock issued in exchange for shares of Caesars common stock in the Merger will not exceed the Aggregate ERI Share Amount.Based on the number of shares of ERI common stock and Caesars common stock, and the principal amount of Caesars convertible notes, outstanding as of September 27, 2019, and assuming the Merger occurred on that date, Caesars stockholders who receiveshares of ERI common stock in exchange for their shares of Caesars common stock in the Merger and holders of Caesars convertible notes (assuming that all Caesars convertible notes are converted immediately following consummation of the Merger into$8.40 in cash and 0.0899 shares of ERI common stock for each share of Caesars common stock into which such Caesars convertible notes were convertible immediately prior to the Merger) would be issued an aggregate of approximately 76 million shares ofERI common stock and would hold approximately 49%, in the aggregate, of the issued and outstanding shares of ERI common stock.

ERI commonstock trades on the Nasdaq Global Select Market under the symbol “ERI.”

ERI will hold the special meeting of ERI stockholders(the “ERI Special Meeting”) on November 15, 2019 at 9:00 a.m., Pacific Time, at Eldorado Resort Casino, 345 N. Virginia St., Reno, Nevada 89501. At the ERI Special Meeting, ERI stockholders will be asked to:

 

 1.

approve the issuance of ERI common stock in connection with the transactions contemplated by the MergerAgreement (the “Share Issuance”);

 

 2.

approve, subject to and promptly following the consummation of the Merger, the reincorporation of ERI fromNevada to Delaware (the “Delaware Conversion”);

 

 3.

approve the Second Amended and Restated Articles of Incorporation of ERI (the “ERI A&R NevadaCharter”), to be effective upon consummation of the Merger if (and only if) the Delaware Conversion is not approved;

 

 4.

approve one or more adjournments of the ERI Special Meeting, if appropriate, to solicit additional proxies ifthere are insufficient votes to approve the Share Issuance at the time of the ERI Special Meeting; and

 

 5.

transact such other business as may properly come before the ERI Special Meeting.

The ERI board of directors unanimously recommends that ERI stockholders vote FOR each of the proposals presented at the ERI Special Meeting.


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Concurrently with the execution of the Merger Agreement, Recreational Enterprises, Inc.(“REI”), a significant ERI stockholder, entered into a voting agreement with Caesars pursuant to which REI agreed to vote all shares of ERI common stock owned by REI FOR each of the Share Issuance, the Delaware Conversion and theERI A&R Nevada Charter, on the terms and subject to the conditions of the voting agreement. At the close of business on October 4, 2019, the record date for the ERI Special Meeting, REI beneficially owned 11,129,867 shares of ERI common stock orapproximately 14.35% of the shares of ERI common stock outstanding on that date. REI has also agreed to certain restrictions on the sale of its shares of ERI common stock prior to the Merger, as further described in this joint proxystatement/prospectus.

Caesars will hold the special meeting of Caesars stockholders (the “Caesars Special Meeting”) on November15, 2019 at 9:00 a.m., Pacific Time, in the Tuscana Chapel at Caesars Palace, One Caesars Palace Drive, Las Vegas, Nevada 89109. At the Caesars Special Meeting, Caesars stockholders will be asked to:

 

 1.

adopt the Merger Agreement and approve the Merger;

 

 2.

approve, on an advisory basis, the compensation that will or may become payable to Caesars’ named executiveofficers (as identified in accordance with Securities and Exchange Commission regulations) (collectively referred to herein as Caesars’ “named executive officers”) in connection with the Merger;

 

 3.

approve one or more adjournments of the Caesars Special Meeting, if appropriate, to solicit additional proxiesif there are insufficient votes to adopt the Merger Agreement and approve the Merger at the time of the Caesars Special Meeting; and

 

 4.

transact such other business as may properly come before the Caesars Special Meeting.

The Caesars board of directors unanimously recommends that Caesars stockholders vote FOR each of the proposals presented at the CaesarsSpecial Meeting.

Concurrently with the execution of the Merger Agreement, certain stockholders of Caesars affiliated with Carl C. Icahn(collectively, the “Caesars Significant Stockholder”) entered into a voting agreement with ERI pursuant to which the Caesars Significant Stockholder agreed to vote all shares of Caesars common stock owned by the Caesars SignificantStockholder FOR the adoption of the Merger Agreement and the approval of the Merger, on the terms and subject to the conditions of the voting agreement. At the close of business on October 4, 2019, the record date for the Caesars SpecialMeeting, the Caesars Significant Stockholder beneficially owned 114,250,942 shares of Caesars common stock or approximately 16.83% of the shares of Caesars common stock outstanding and entitled to vote on that date. The Caesars SignificantStockholder has also agreed to certain restrictions on the sale of its shares of Caesars common stock prior to the Merger, as further described in this joint proxy statement/prospectus.

YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the ERI Special Meeting or the Caesars Special Meeting, as applicable, pleasetake the time to vote over the Internet or by telephone as described in this joint proxy statement/prospectus or by completing the enclosed proxy card and mailing it in the enclosed envelope. Information about the meetings, the Merger and the otherbusiness to be considered at the meetings is contained in this joint proxy statement/prospectus. You are urged to read this joint proxy statement/prospectus, including the annexes and the documents incorporated by reference, carefully and in itsentirety.

In particular, you should carefully read “Risk Factors”beginning on page 48 for a discussion of certain of the material risks to consider in evaluating the Merger Agreement and the Merger and how they will affect you.

Thank you for your cooperation and continued support.

Sincerely,

 

LOGO

Thomas R. Reeg

Chief Executive Officer

Eldorado Resorts, Inc.

  

LOGO

 

Tony Rodio

Chief Executive Officer

Caesars EntertainmentCorporation

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved theMerger Agreement and the Merger described in this joint proxy statement/prospectus or the ERI common stock to be issued in the Merger or passed upon the adequacy or accuracy of this joint proxy statement/prospectus. Any representation to thecontrary is a criminal offense.

This joint proxy statement/prospectus is dated October 11, 2019 and is first being mailed to ERI stockholders of recordand Caesars stockholders of record on or about October 15, 2019.


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ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates by reference important business and financial information about each of ERI and Caesarsfrom documents that each company has filed with the Securities and Exchange Commission (the “SEC”) but that are not included in or delivered with this joint proxy statement/prospectus. You may read and copy any report, statement or otherinformation that ERI and Caesars file with the SEC at the SEC’s public reference room at the following location: Public Reference Room, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. This information is available to you without charge upon your oral or written request. You canobtain the documents incorporated by reference into this joint proxy statement/prospectus without charge by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

Eldorado Resorts, Inc.

100 West Liberty Street, Suite 1150

Reno, Nevada 89501

Attention: Investor Relations

Telephone: (775) 328-0112

www.eldoradoresorts.com

  

Caesars Entertainment Corporation

OneCaesars Palace Drive

Las Vegas, Nevada 89109

Attention:Investor Relations

Telephone: (800) 318-0047

investor.caesars.com

All website addresses given in this joint proxy statement/prospectus are for informational purposes only andare not intended to be active links and information contained on the websites of ERI or Caesars is not incorporated by reference in, nor considered to be part of, this joint proxy statement/prospectus.

If you would like to request documents, please do so by November 8, 2019 at 5:00 p.m., Eastern Time, in order to receive them before themeetings.

For a more detailed description of the information incorporated by reference into this joint proxy statement/prospectus andhow you can obtain it, please see “Where You Can Find More Information” beginning on page 270.


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LOGO

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD NOVEMBER 15, 2019

To OurStockholders:

A special meeting of stockholders of Eldorado Resorts, Inc., a Nevada corporation (“ERI”), will be held atEldorado Resort Casino, 345 N. Virginia St., Reno, Nevada 89501 on November 15, 2019 at 9:00 a.m., Pacific Time. The special meeting of stockholders (the “ERI Special Meeting”) is being held for the following purposes:

1.    to approve the issuance (the “Share Issuance”) of common stock, par value $0.00001 per share, of ERI, inconnection with the transactions contemplated by the Agreement and Plan of Merger, dated as of June 24, 2019 (as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of August 15, 2019, and as it may be further amendedfrom time to time, the “Merger Agreement”), by and among Caesars Entertainment Corporation, a Delaware corporation (“Caesars”), ERI and Colt Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of ERI(“Merger Sub”), pursuant to which Merger Sub will merge with and into Caesars (the “Merger”) (ERI Proposal No. 1);

2.    to approve, subject to and promptly following the consummation of the Merger, the reincorporation of ERI from Nevadato Delaware (the “Delaware Conversion”) (ERI Proposal No. 2);

3.    to approve the Second Amended andRestated Articles of Incorporation of ERI (the “ERI A&R Nevada Charter”), a copy of which is included as Annex F to this joint proxy statement/prospectus, to be effective upon consummation of the Merger if (and only if) the DelawareConversion is not approved (ERI Proposal No. 3);

4.    to approve one or more adjournments of the ERI SpecialMeeting, if appropriate, to solicit additional proxies if there are insufficient votes to approve the Share Issuance at the time of the ERI Special Meeting (ERI Proposal No. 4); and

5.    to transact such other business as may properly come before the ERI Special Meeting.

The above matters are more fully described in the accompanying joint proxy statement/prospectus of ERI and Caesars, which provides you withinformation about ERI, Caesars, the ERI Special Meeting, the Share Issuance, the Delaware Conversion, the ERI A&R Nevada Charter, the Merger, the Merger Agreement and other documents related to the Merger and other related matters. Theaccompanying joint proxy statement/prospectus also includes, as Annex A, a copy of the Agreement and Plan of Merger, and as Annex B, a copy of Amendment No. 1 to Agreement and Plan of Merger. ERI encourages you to carefully read theaccompanying joint proxy statement/prospectus in its entirety, including the annexes and the documents incorporated by reference.

Onlyholders of ERI common stock as of the close of business on October 4, 2019, which is the record date for the ERI Special Meeting, are entitled to receive notice of, attend and vote at the ERI Special Meeting.

We hope that as many stockholders as possible will personally attend the ERI Special Meeting. Whether or not you plan to attend the ERISpecial Meeting, please complete the enclosed proxy card and sign, date and return it promptly so that your shares will be represented. You also may vote your shares over the Internet or by telephone by following the instructions included on theproxy card. Submitting your proxy in writing, over the Internet or by telephone will not prevent you from voting in person at the ERI Special Meeting. The affirmative vote of a majority of the votes cast on the proposal to approve the ShareIssuance, in person or by proxy, will be


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required to approve the Share Issuance. The affirmative vote by the holders of a majority of all of the outstanding shares of ERI common stock will be required to approve the Delaware Conversionand the ERI A&R Nevada Charter. The affirmative vote of a majority of the shares of ERI common stock present, in person or by proxy, and entitled to vote at the ERI Special Meeting will be required to approve the proposal to adjourn the ERISpecial Meeting.

The ERI board of directors unanimously recommends that ERI stockholders vote FOR each of the proposals presented atthe ERI Special Meeting.

By Order of the ERI Board of Directors,

 

LOGO

Gary L. Carano

Executive Chairman of the Board of Directors


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LOGO

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD NOVEMBER 15, 2019

To OurStockholders:

A special meeting of stockholders of Caesars Entertainment Corporation, a Delaware corporation (“Caesars”), willbe held in the Tuscana Chapel at Caesars Palace, One Caesars Palace Drive, Las Vegas, Nevada 89109 on November 15, 2019 at 9:00 a.m., Pacific Time. The special meeting of stockholders (the “Caesars Special Meeting”) is being held forthe following purposes:

1.    to adopt the Merger Agreement and approve the Merger (Caesars Proposal No. 1);

2.    to approve, on an advisory basis, the compensation that will or may become payable to Caesars’ named executiveofficers in connection with the Merger (Caesars Proposal No. 2);

3.    to approve one or more adjournments ofthe Caesars Special Meeting, if appropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement and approve the Merger at the time of the Caesars Special Meeting (Caesars Proposal No. 3); and

4.    to transact such other business as may properly come before the Caesars Special Meeting.

The above matters are more fully described in the accompanying joint proxy statement/prospectus of ERI and Caesars, which provides you withinformation about Caesars, ERI, the Caesars Special Meeting, the Merger, the Merger Agreement and other documents related to the Merger and other related matters. The accompanying joint proxy statement/prospectus also includes, as Annex A, a copy ofthe Agreement and Plan of Merger, and as Annex B, a copy of Amendment No. 1 to Agreement and Plan of Merger. Caesars encourages you to carefully read the accompanying joint proxy statement/prospectus in its entirety, including the annexes andthe documents incorporated by reference.

Only holders of Caesars common stock as of the close of business on October 4, 2019, which isthe record date for the Caesars Special Meeting, are entitled to receive notice of, attend and vote at the Caesars Special Meeting.

Whether or not you plan to attend the Caesars Special Meeting, please complete the enclosed proxy card and sign, date and return it promptlyso that your shares will be represented. You also may vote your shares over the Internet or by telephone by following the instructions included on the proxy card. Submitting your proxy in writing, over the Internet or by telephone will not preventyou from voting in person at the Caesars Special Meeting.

Adoption of the Merger Agreement and approval of the Merger requires theaffirmative vote of the holders of a majority of the shares of Caesars common stock outstanding and entitled to vote as of the close of business on the record date for the Caesars Special Meeting. The affirmative vote of a majority of the shares ofCaesars common stock present, in person or by proxy, and entitled to vote at the Caesars Special Meeting will be required (a) to approve, on an advisory basis, the compensation that will or may become payable to Caesars’ named executiveofficers in connection with the Merger and (b) to approve the proposal to adjourn the Caesars Special Meeting. Because the compensation vote is advisory, it will not be binding on Caesars, and failure to receive the vote required for approvalwill not change Caesars’ obligations to pay the merger-related compensation, pursuant


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to the terms of the applicable agreements and arrangements. The Caesars board of directors unanimously recommends that Caesars stockholders vote FOR each of the proposals presented at theCaesars Special Meeting.

By Order of the Caesars Board of Directors,

 

LOGO

Tony Rodio

Chief Executive Officer


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TABLE OF CONTENTS

 

   Page 

CERTAIN DEFINED TERMS USED IN THIS JOINT PROXYSTATEMENT/PROSPECTUS

   1 

QUESTIONS AND ANSWERS ABOUT THE ERI SPECIAL MEETING

   6 

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE CAESARS SPECIALMEETING

   13 

SUMMARY

   26 

The Companies

   26 

The ERI Special Meeting

   27 

Shares Owned by ERI Directors and Executive Officers

   27 

The Caesars Special Meeting

   27 

Shares Owned by Caesars Directors and Executive Officers

   28 

The Merger

   28 

ERI Board’s Reasons for the Merger

   31 

Opinion of ERI’s Financial Advisor

   31 

Recommendations of the ERI Board

   32 

Interests of Certain ERI Directors and Executive Officers in theMerger

   32 

Caesars Board’s Reasons for the Merger

   32 

Opinion of Caesars’ Financial Advisor

   33 

Recommendation of the Caesars Board

   33 

Interests of Caesars’ Directors and Executive Officers in theMerger

   33 

The Merger Agreement

   33 

Bank Commitment Letter and Related Financing

   40 

The Voting Agreements

   41 

The Master Transaction Agreement and Real Estate Purchase Agreements

   42 

U.S. Federal Income Tax Considerations

   43 

Comparison of Stockholders’ Rights

   44 

Appraisal Rights in Connection with the Merger

   44 

Litigation Relating to the Merger

   45 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

   46 

RISK FACTORS

   48 

Risks Relating to the Merger

   48 

Risks Relating to the Combined Company Following the Merger

   57 

Risks Relating to Caesars

   63 

Risks Relating to ERI

   63 

THE COMPANIES

   64 

ERI and Merger Sub

   64 

Caesars

   64 


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   Page 

Material Contracts Between ERI and Caesars

   64 

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF ERI

   65 

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OFCAESARS

   68 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

   70 

COMPARATIVE PER SHARE MARKET PRICE, DIVIDEND AND OTHER DATA

   102 

THE ERI SPECIAL MEETING

   105 

ERI PROPOSAL NO. 1: APPROVAL OF THE SHARE ISSUANCE

   110 

ERI PROPOSAL NO. 2: APPROVAL OF THE DELAWARE CONVERSION

   111 

ERI PROPOSAL NO. 3: APPROVAL OF THE ERI A&R NEVADACHARTER

   116 

ERI PROPOSAL NO. 4: APPROVAL OF ONE OR MORE ADJOURNMENTS OF THE ERI SPECIAL MEETING

   118 

THE CAESARS SPECIAL MEETING

   119 

CAESARS PROPOSAL NO. 1: ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER

   125 

CAESARS PROPOSAL NO. 2: NON-BINDING, ADVISORY APPROVAL OF THE COMPENSATION THAT WILL OR MAY BECOME PAYABLE TO CAESARS’ NAMED EXECUTIVE OFFICERS

   126 

CAESARS PROPOSAL NO. 3: APPROVAL OF ONE OR MORE ADJOURNMENTS OF THE CAESARS SPECIAL MEETING

   127 

THE MERGER

   128 

Background of the Merger

   128 

ERI Board’s Reasons for the Merger

   142 

Opinion of ERI’s Financial Advisor

   145 

Caesars Board’s Reasons for the Merger and Recommendation of the Caesars Board

   152 

Opinion of Caesars’ Financial Advisor

   157 

Certain ERI and Caesars Financial Projections

   167 

Effects of the Merger

   172 

Merger Consideration

   172 

Electing the Form of Merger Consideration

   175 

Ownership of ERI Following the Merger

   177 

Interests of Certain ERI Directors and Executive Officers in theMerger

   178 

Interests of Caesars’ Directors and Executive Officers in theMerger

   178 

Golden Parachute Compensation

   186 

Regulatory Filings and Approvals Required to Consummate theMerger

   188 

Closing and Effectiveness of the Merger

   189 

Composition of the ERI Board and Management Following theMerger

   189 

 

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   Page 

Accounting Treatment of the Merger

   190 

Stock Exchange Listing of ERI Common Stock

   190 

Delisting and Deregistration of Caesars Common Stock

   190 

Litigation Relating to the Merger

   190 

THE MERGER AGREEMENT

   193 

Explanatory Note Regarding the Merger Agreement

   193 

The Merger

   193 

Effective Time and Closing

   194 

Merger Consideration

   194 

Proration

   195 

Representations and Warranties

   199 

Conduct of Business Pending the Merger

   201 

No Solicitation of Alternative Proposals

   205 

Special Meetings of the Stockholders

   209 

Efforts to Consummate the Merger

   209 

Indemnification and Insurance

   210 

Actions With Respect to Convertible Notes

   211 

Employee Matters

   211 

Debt Financing

   212 

Governance Matters Following the Merger

   212 

Delaware Conversion

   213 

Other Covenants and Agreements

   213 

Conditions to the Obligation to Effect the Merger

   213 

Termination of the Merger Agreement

   215 

Termination Fee; Expenses

   217 

Amendment; Waivers

   218 

Governing Law

   218 

Specific Performance

   218 

MASTER TRANSACTION AGREEMENT AND REAL ESTATE PURCHASE AGREEMENTS

   219 

Master Transaction Agreement

   219 

Real Estate Purchase Agreements

   221 

BANK COMMITMENT LETTER AND RELATED FINANCING

   222 

THE CAESARS SIGNIFICANT STOCKHOLDER VOTING AGREEMENT

   223 

Parties to the Caesars Significant Stockholder VotingAgreement

   223 

Agreement to Vote; No Conflicting Actions

   223 

Other Covenants

   223 

Waiver of Appraisal Rights

   224 

Termination

   224 

 

-iii-


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   Page 

THE REI VOTING AGREEMENT

   225 

Parties to the REI Voting Agreement

   225 

Agreement to Vote; No Conflicting Actions

   225 

Other Covenants

   225 

Waiver of Appraisal Rights

   226 

Termination

   226 

U.S. FEDERAL INCOME TAX CONSIDERATIONS

   227 

Tax Consequences of the Merger

   228 

Tax Consequences to Non-U.S. Holders of the Ownership and Disposition of ERI Common Stock Received in the Merger

   231 

FATCA

   232 

Information Reporting and Backup Withholding

   233 

Tax Consequences of the Delaware Conversion

   233 

DESCRIPTION OF ERI’S CAPITAL STOCK

   234 

COMPARISON OF STOCKHOLDERS’ RIGHTS

   235 

APPRAISAL RIGHTS OF CAESARS STOCKHOLDERS

   258 

BENEFICIAL OWNERSHIP OF ERI COMMON STOCK

   263 

BENEFICIAL OWNERSHIP OF CAESARS COMMON STOCK

   265 

OTHER MATTERS

   268 

ERI Stockholder Proposals for 2020 Annual Meeting ofStockholders

   268 

Caesars Stockholder Proposals for 2020 Annual Meeting ofStockholders

   268 

LEGAL MATTERS

   269 

EXPERTS

   269 

WHERE YOU CAN FIND MORE INFORMATION

   270 

ANNEXES

   273 

 

Annex A

  Agreement and Plan of Merger

Annex B

  Amendment No. 1 to Agreement and Plan of Merger

Annex C

  Plan of Conversion

Annex D

  Delaware Certificate of Incorporation

Annex E

  Delaware Bylaws

Annex F

  ERI A&R Nevada Charter

Annex G

  ERI A&R Nevada Bylaws

Annex H

  Caesars Significant Stockholder Voting Agreement

Annex I

  REI Voting Agreement

Annex J

  Opinion of J.P. Morgan Securities LLC

Annex K

  Opinion of PJT Partners LP

Annex L

  Section 262 of the General Corporation Law of the State of Delaware

 

-iv-


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CERTAIN DEFINED TERMS USED IN THIS JOINT PROXYSTATEMENT/PROSPECTUS

 

Aggregate Caesars Share Amount

A number of shares of Caesars common stock equal to (a) 682,161,838 (which includes the Escrow Trust Shares) plus (b) the number of shares of Caesars common stock issued after June 24, 2019 and prior to the Effective Time pursuantto the exercise of certain equity awards issued under Caesars Stock Plans or conversion of Caesars’ outstanding convertible notes.

 

Aggregate Cash Amount

An amount of cash equal to (a) the sum of (i) $8.40 plus (ii) if the applicable closing conditions set forth in the Merger Agreement are not satisfied by March 25, 2020, an amount equal to $0.003333 for each day (provided thatsuch amount will not be payable if the waiting period under the HSR Act has expired or been terminated but (to the extent required) the consents of the holders of Caesars’ 5.00% convertible senior notes due 2024 have not been obtained) fromMarch 25, 2020 until the Closing Date, multiplied by (b) the Aggregate Caesars Share Amount.

 

Aggregate ERI Share Amount

A number of shares of ERI common stock equal to 0.0899 multiplied by the Aggregate Caesars Share Amount.

 

Caesars

Caesars Entertainment Corporation, a Delaware corporation.

 

Caesars Board

The board of directors of Caesars.

 

Caesars common stock

The common stock, par value $0.01 per share, of Caesars.

 

Caesars Significant Stockholder Voting Agreement

The Voting and Support Agreement, dated as of June 24, 2019, as it may be amended from time to time, by and among ERI and the Caesars Significant Stockholder.

 

Caesars Stock Plans

(a) The Caesars Entertainment Corporation 2012 Performance Incentive Plan (as amended), (b) the Caesars Entertainment Corporation 2014 Performance Incentive Plan, (c) the Caesars Entertainment Corporation 2017 Performance IncentivePlan (as amended) and (d) the Caesars Entertainment Corporation Management Equity Incentive Plan.

 

Cash Election

An election to receive the Cash Election Consideration.

 

Cash Election Consideration

The consideration payable in cash in respect of a share of Caesars common stock in an amount equal to the Per Share Amount. Subject to the proration provisions discussed in this joint proxy statement/prospectus, at the Effective Time, each shareof Caesars common stock for which the holder has made a Cash Election and each other share of Caesars common stock that is required to be converted into Cash Election Consideration pursuant to the proration provisions of the Merger Agreement will beconverted into the right to receive the Cash Election Consideration.

 

 

Assuming that (a) the ERI Common Stock VWAP was equal to the closing price of ERI common stock on September 27, 2019of $38.56 and (b) the Aggregate Caesars Share Amount was equal to the number of shares of Caesars common stock outstanding as of


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September 27, 2019, or 687,271,018 shares (which includes the Escrow Trust Shares), the Per Share Amount and the Cash Election Consideration would be equal to $11.87.

 

Cash Election Shares

Shares of Caesars common stock for which a holder has made a Cash Election.

 

Ceased to Serve

An individual is not at a member of the ERI Board at the Effective Time because such individual has resigned or otherwise been removed as a member of the ERI Board (a) due to a final and binding determination by a governmental entity thatsuch individual is not suitable to serve, or otherwise may not serve, as a member of the ERI Board or (b) because a governmental entity is likely to determine that such individual is not suitable to serve, or otherwise may not serve, as amember of the ERI Board.

 

Certificate of Merger

Certificate of merger to be filed in Delaware in connection with the Merger.

 

Closing Date

The date on which the consummation of the Merger occurs.

 

Code

The Internal Revenue Code of 1986, as amended.

 

DGCL

The General Corporation Law of the State of Delaware.

 

Dissenting Shares

Shares of Caesars common stock issued and outstanding immediately prior to the Effective Time that are held by any holder who has not voted in favor of the Merger and who, pursuant to Section 262 of the DGCL, is entitled to demand andproperly demands appraisal of those shares.

 

DOJ

U.S. Department of Justice.

 

Effective Time

The time at which the Certificate of Merger is filed with the Secretary of State of the State of Delaware in connection with the Merger, or such other time specified by mutual agreement of the parties to the Merger.

 

Election Deadline

The deadline for each Caesars stockholder to submit an election choosing the form of Merger Consideration that the Caesars stockholder elects to receive in the Merger in respect of the shares of Caesars common stock held by that stockholder,which is 5:00 p.m., New York time, on the second business day prior to the anticipated Effective Time or such other time as mutually agreed by ERI and Caesars. The election form will be mailed no less than 30 days prior to the anticipated EffectiveTime, or on such other date as ERI and Caesars may mutually agree, to each holder of record of Caesars common stock as of five business days prior to the mailing date or such other date as mutually agreed to be ERI and Caesars. You arenot being asked to make an election at this time.

 

ERI

Eldorado Resorts, Inc., a Nevada corporation.

 

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ERI Board

The board of directors of ERI.

 

ERI common stock

The common stock, par value $0.00001 per share, of ERI.

 

ERI Common Stock VWAP

The volume weighted average price of a share of ERI common stock for a 10 trading day period, starting with the opening of trading on the 11th trading day prior to the anticipated Closing Date to the closing of trading on the 2nd to last tradingday prior to the anticipated Closing Date, as reported by Bloomberg Finance L.P.

 

Escrow Trust Shares

8,271,660 shares of Caesars common stock being held in escrow trust to satisfy unsecured claims pursuant to the Third Amended Joint Plan of Reorganization, filed with the U.S. Bankruptcy Court for the Northern District of Illinois inChicago on January 13, 2017, at Docket No. 6318.

 

Exchange Act

Securities Exchange Act of 1934, as amended.

 

Exchange Agent

The bank or trust company appointed to act as exchange agent in accordance with the Merger Agreement.

 

FTC

The Federal Trade Commission.

 

HSR Act

The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

IRS

Internal Revenue Service.

 

Merger

The merger of Merger Sub with and into Caesars, with Caesars continuing as the surviving corporation and as a direct wholly owned subsidiary of ERI.

 

Merger Agreement

Agreement and Plan of Merger, dated as of June 24, 2019, as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of August 15, 2019, and as it may be further amended from time to time, by and among Caesars, ERI andMerger Sub.

 

Merger Consideration

With respect to a given share of Caesars common stock, the right to receive either the Cash Election Consideration or the Stock Election Consideration.

 

Merger Sub

Colt Merger Sub, Inc., a Delaware corporation and a wholly owned direct subsidiary of ERI.

 

Milbank

Milbank LLP, counsel to ERI.

 

NASDAQ

The Nasdaq Global Select Market.

 

No Election Shares

Shares of Caesars common stock with respect to which (a) no election to receive the Cash Election Consideration or the Stock Election Consideration is properly made, or no election form is returned, (b) an election form specifies thatthe holder thereof makes no election or (c) an election to receive the Cash Election Consideration or the Stock Election Consideration is properly revoked.

 

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NRS

Nevada Revised Statutes, as amended.

 

Per Share Amount

An amount equal to (a) (i) the Aggregate Cash Amount, plus (ii) the product of (A) the Aggregate ERI Share Amount and (B) the ERI Common Stock VWAP, divided by (b) the Aggregate Caesars Share Amount.

 

 Assuming that (a) the ERI Common Stock VWAP was equal to the closing price of ERI common stock on September 27, 2019 of $38.56 and (b) the Aggregate Caesars Share Amount was equal to the number of sharesof Caesars common stock outstanding as of September 27, 2019, or 687,271,018 shares (which includes the Escrow Trust Shares), the Per Share Amount would be equal to $11.87.

 

REI Voting Agreement

The Voting and Support Agreement, dated as of June 24, 2019, as it may be amended from time to time, by and between Caesars and REI.

 

SEC

U.S. Securities and Exchange Commission.

 

Securities Act

The Securities Act of 1933, as amended.

 

Share Issuance

The issuance of shares of ERI common stock in connection with the transactions contemplated by the Merger Agreement.

 

Skadden

Skadden, Arps, Slate, Meagher & Flom LLP, counsel to Caesars.

 

Stock Election

An election to receive the Stock Election Consideration.

 

Stock Election Consideration

The consideration payable in respect of a share of Caesars common stock that will be payable in shares of ERI common stock, which consideration will consist of a number of shares of ERI common stock equal to (a) the Per Share Amount dividedby (b) the ERI Common Stock VWAP. No fractional shares of ERI common stock will be issued as part of the Stock Election Consideration. A Caesars stockholder who would otherwise have received a fraction of a share of ERI common stock willreceive an amount of cash equal to such fraction of a share multiplied by the ERI Common Stock VWAP. Subject to the proration provisions discussed in this joint proxy statement/prospectus, at the Effective Time, each share of Caesars common stockfor which the holder has made a Stock Election, and each other share of Caesars common stock that is required to be converted into Stock Election Consideration pursuant to the proration provisions of the Merger Agreement, will be converted into theright to receive the Stock Election Consideration.

 

 Assuming that (a) the ERI Common Stock VWAP was equal to the closing price of ERI common stock on September 27, 2019 of $38.56 and (b) the Aggregate Caesars Share Amount was equal to the number of sharesof Caesars common stock outstanding as of September 27, 2019, or 687,271,018 shares (which includes the Escrow Trust Shares), the Stock Election Consideration would be equal to 0.3077 shares of ERI common stock.

 

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Stock Election Shares

Shares of Caesars common stock for which a holder has made a Stock Election.

 

Voting Agreements

The Caesars Significant Stockholder Voting Agreement and the REI Voting Agreement.

Unless otherwise indicated, all references tooutstanding shares of Caesars common stock include the Escrow Trust Shares; however, the Escrow Trust Shares are not entitled to vote and therefore are not included in references to shares of Caesars common stock outstanding and entitled to vote atthe Caesars Special Meeting.

 

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QUESTIONS AND ANSWERS ABOUT THE ERI SPECIAL MEETING

The ERI Board is soliciting proxies from its stockholders to vote at a special meeting of ERI stockholders, to be held at 9:00 a.m., PacificTime, on November 15, 2019 at Eldorado Resort Casino, 345 N. Virginia St., Reno, Nevada 89501 (the “ERI Special Meeting”), and any adjournment of the ERI Special Meeting, if appropriate.

The questions and answers below highlight selected information from this joint proxy statement/prospectus and are intended to briefly addresssome commonly asked questions about, among other things, (a) the Merger Agreement, the Merger Consideration and the Share Issuance, (b) the Merger, (c) the Delaware Conversion and the ERI A&R Nevada Charter and (d) the ERISpecial Meeting, where the stockholders of ERI will be asked to consider and vote on the approval of the Share Issuance, the Delaware Conversion, the ERI A&R Nevada Charter and related matters.

The following questions and answers do not contain all of the information that is important to you. You should carefully read this joint proxystatement/prospectus in its entirety, including the annexes and the documents incorporated by reference, to fully understand the matters to be acted upon and the voting procedures for the ERI Special Meeting. You may obtain the informationincorporated by reference into this joint proxy statement/prospectus without charge by following the instructions under “Where You Can Find More Information” beginning on page 270.

For certain questions and answers about the Caesars Special Meeting, see “Questions and Answers about the Merger and the CaesarsSpecial Meeting” beginning on page 13.

 

Q.

Why have I received this joint proxy statement/prospectus?

 

A.

You are receiving this joint proxy statement/prospectus because you were a stockholder of ERI as of the closeof business on the record date for the ERI Special Meeting. On June 23, 2019, the ERI Board and the Caesars Board each approved the Agreement and Plan of Merger providing for Caesars to be acquired by ERI, and the Agreement and Plan of Mergerwas executed on June 24, 2019 (and was subsequently amended on August 15, 2019, pursuant to Amendment No. 1 to Agreement and Plan of Merger). Copies of the Agreement and Plan of Merger and Amendment No. 1 to Agreement and Plan ofMerger are attached to this joint proxy statement/prospectus as Annex A and Annex B, which ERI encourages you to read in their entirety.

In order for the Merger to be consummated, ERI stockholders must approve the issuance of shares of ERI common stock, or the Share Issuance, aspart of the Merger Consideration. Approval of the Share Issuance requires the affirmative vote of a majority of the votes cast, in person or by proxy, on the proposal to approve the Share Issuance. The ERI Board has designated Thomas R. Reeg,Anthony L. Carano and Edmund L. Quatmann, Jr. as proxies, who will vote the shares represented by proxies at the ERI Special Meeting in the manner indicated by the proxies.

This joint proxy statement/prospectus is being delivered to you as a proxy statement because the ERI Board and the Caesars Board are solicitingproxies from their respective stockholders. The ERI Board is soliciting proxies from its stockholders to vote on the approval of the Share Issuance, approval of the Delaware Conversion and approval of the ERI A&R Nevada Charter, as well as theother matters set forth in the notice of the ERI Special Meeting and described in this joint proxy statement/prospectus, and your proxy will be used at the ERI Special Meeting or at any adjournment thereof. It is a prospectus because ERI will issueERI common stock to Caesars stockholders in connection with the Merger.

 

Q.

What are the specific proposals on which I am asked to vote at the ERI Special Meeting?

 

A.

ERI stockholders are being asked to approve four proposals at the ERI Special Meeting:

 

  

ERI stockholders are being asked to approve the Share Issuance, as contemplated by the Merger Agreement (ERIProposal No. 1 or the “Share Issuance Proposal”);

 

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ERI stockholders are being asked to approve the reincorporation of ERI from Nevada to Delaware, or the DelawareConversion, which would take effect subject to and promptly following the consummation of the Merger (ERI Proposal No. 2 or the “Delaware Conversion Proposal”);

 

  

ERI stockholders are being asked to approve the Second Amended and Restated Articles of Incorporation of ERI (the“ERI A&R Nevada Charter”), a copy of which is included as Annex F to this joint proxy statement/prospectus, which would take effect upon consummation of the Merger if (and only if) the Delaware Conversion is not approved (ERI ProposalNo. 3 or the “Charter Amendment Proposal”); and

 

  

ERI stockholders are being asked to approve one or more adjournments of the ERI Special Meeting, if appropriate,to solicit additional proxies if there are insufficient votes to approve the Share Issuance at the time of the ERI Special Meeting (ERI Proposal No. 4).

Under NASDAQ listing rules, stockholder approval is required prior to the issuance of common stock if the number of shares of common stock tobe issued in a transaction equals 20% or more of the number of shares of common stock outstanding before the issuance. The Share Issuance that will be effected in connection with the Merger will result in the issuance of a number of shares of ERIcommon stock equal to approximately 49% of the shares of ERI common stock outstanding before the Share Issuance, based on the number of shares of ERI common stock and Caesars common stock, and the principal amount of Caesars convertible notes,outstanding on September 27, 2019 (assuming that all Caesars convertible notes are converted immediately following consummation of the Merger into $8.40 in cash and 0.0899 shares of ERI common stock for each share of Caesars common stock into whichsuch Caesars convertible notes were convertible immediately prior to the Merger). Accordingly, ERI stockholders are being asked to consider and vote on the Share Issuance.

 

Q.

What happens if the Delaware Conversion is not approved?

 

A.

If the Delaware Conversion is not approved, ERI will remain a Nevada corporation and subject to Nevadalaw, its current amended and restated articles of incorporation will continue to apply (unless the Charter Amendment Proposal is approved, in which case the ERI A&R Nevada Charter will apply) and the amended and restated Nevada bylaws attachedas Annex G (the “ERI A&R Nevada Bylaws”) will go into effect. While the Merger Agreement requires ERI to use reasonable best efforts to obtain stockholder approval of the Delaware Conversion Proposal, the approval of this proposal isnot a condition to the consummation of the Merger. If, however, the Share Issuance and ERI A&R Nevada Charter are approved but the Delaware Conversion is not approved, following the consummation of the Merger, ERI’s current amended andrestated articles of incorporation will be replaced with the ERI A&R Nevada Charter attached to this joint proxy statement/prospectus as Annex F.

 

Q.

What happens if neither the Delaware Conversion Proposal nor the Charter Amendment Proposal is approved?

 

A.

If neither the Delaware Conversion nor the ERI A&R Nevada Charter is approved, but the ShareIssuance is approved, following consummation of the Merger, ERI will remain a Nevada corporation and subject to Nevada law, its current amended and restated articles of incorporation will continue to apply and the ERI A&R Nevada Bylaws will gointo effect.

 

Q.

What is the consideration that ERI will pay to Caesars stockholders in the Merger?

 

A.

The aggregate consideration that ERI will pay in respect of outstanding shares of Caesars common stock in theMerger will be (a) an amount of cash equal to (i) the sum of (A) $8.40 plus (B) if the applicable closing conditions set forth in the Merger Agreement are not satisfied by March 25, 2020, an amount equal to $0.003333 for each day(provided that such amount will not be payable if the waiting period under the HSR Act has expired or been terminated but (to the extent required) the consents of the holders of Caesars’ 5.00%

 

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 convertible senior notes due 2024 have not been obtained) from March 25, 2020 until the Closing Date, multiplied by (ii) a number of shares of Caesars common stock (the “AggregateCaesars Share Amount”) equal to (A) 682,161,838 (which includes the Escrow Trust Shares) plus (B) the number of shares of Caesars common stock issued after June 24, 2019 and prior to the Effective Time pursuant to the exercise ofcertain equity awards issued under Caesars Stock Plans or conversion of Caesars’ outstanding convertible notes (the “Aggregate Cash Amount”), plus (b) a number of shares of ERI common stock equal to (i) 0.0899 multiplied by(ii) the Aggregate Caesars Share Amount (the “Aggregate ERI Share Amount”).

Each holder of a share of Caesarscommon stock will be entitled to make an election to receive the Cash Election Consideration or the Stock Election Consideration. The amount of cash constituting the Cash Election Consideration and number of shares of ERI common stock constitutingthe Stock Election Consideration will be determined based on the Per Share Amount. The “Per Share Amount” is equal to (a) (i) the Aggregate Cash Amount, plus (ii) the product of (A) the Aggregate ERI Share Amount and(B) the ERI Common Stock VWAP, divided by (b) the Aggregate Caesars Share Amount.

 

Q.

What is the Cash Election Consideration that ERI will pay Caesars stockholders in the Merger?

 

A.

The Cash Election Consideration payable in respect of a share of Caesars common stock is cash in an amountequal to the Per Share Amount. The aggregate cash consideration paid by ERI in respect of outstanding shares of Caesars common stock will be an amount of cash equal to the Aggregate Cash Amount. Subject to the proration provisions discussed in thisjoint proxy statement/prospectus, at the Effective Time, each share of Caesars common stock for which the holder has made a Cash Election and each other share of Caesars common stock that is required to be converted into Cash Election Considerationpursuant to the proration provisions in the Merger Agreement will be converted into the right to receive the Cash Election Consideration.

 

Q.

What is the Stock Election Consideration that ERI will pay Caesars stockholders in the Merger?

 

A.

The Stock Election Consideration payable in respect of a share of Caesars common stock is a number of shares ofERI common stock equal to (a) the Per Share Amount divided by (b) the ERI Common Stock VWAP. Subject to the proration provisions discussed in this joint proxy statement/prospectus, at the Effective Time, each share of Caesars common stockfor which the holder has made a Stock Election and each other share of Caesars common stock that is required to be converted into Stock Election Consideration pursuant to the proration provisions in the Merger Agreement will be converted into theright to receive the Stock Election Consideration.

 

Q.

How does the ERI Board recommend that ERI stockholders vote?

 

A.

The ERI Board unanimously recommends that ERI stockholders vote:

 

  

FOR the proposal to approve the Share Issuance (ERI Proposal No. 1);

 

  

FOR the proposal to approve the Delaware Conversion (ERI Proposal No. 2);

 

  

FOR the proposal to approve the ERI A&R Nevada Charter (ERI Proposal No. 3); and

 

  

FOR the proposal to approve one or more adjournments of the ERI Special Meeting, if appropriate, tosolicit additional proxies if there are insufficient votes to approve the Share Issuance at the time of the ERI Special Meeting (ERI Proposal No. 4).

For a discussion of the reasons for the recommendation on ERI Proposal No. 1, ERI Proposal No. 2 and ERI Proposal No. 3, see“The Merger—ERI Board’s Reasons for the Merger” beginning on page 142.

Unless you give other instructionson your proxy card, the persons named as proxy holders on the enclosed proxy card will vote in accordance with the recommendations of the ERI Board.

 

Q.

When and where is the ERI Special Meeting?

 

A.

The ERI Special Meeting will be held at 9:00 a.m., Pacific Time, on November 15, 2019 at Eldorado ResortCasino, 345 N. Virginia St., Reno, Nevada 89501. For additional information about the ERI Special Meeting, see “The ERI Special Meeting” beginning on page 105.

 

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Q.

How many votes are required to approve each proposal?

 

A.

ERI Proposal No. 1 requires the affirmative vote of a majority of the votes cast, in person or by proxy,on such proposal.

ERI Proposal No. 2 and ERI Proposal No. 3 require the affirmative vote by the holders of amajority of all of the outstanding shares of ERI common stock.

ERI Proposal No. 4 requires the affirmative vote of the holders of amajority of the shares of ERI common stock present, in person or by proxy, and entitled to vote at the ERI Special Meeting, even if less than a quorum is present at the ERI Special Meeting.

ERI Proposal No. 1, No. 2 and No. 3 require a quorum to be present at the ERI Special Meeting.

 

Q.

What is a quorum?

 

A.

Holders of a majority of the outstanding shares of ERI common stock entitled to vote must be present, in personor by proxy, at the ERI Special Meeting to constitute a quorum and to conduct business at the ERI Special Meeting. Your shares are counted as present if you attend the ERI Special Meeting in person or properly vote over the Internet, by telephone orby submitting a properly executed proxy card by mail. As of October 4, 2019, the record date for the ERI Special Meeting, 77,545,678 shares of ERI common stock were outstanding. Abstentions, which occur when shares are voted ABSTAIN withrespect to one or more proposals, will be counted as present for the purpose of determining a quorum. If you do not provide voting instructions to your broker or other nominee, your shares of ERI common stock will not be counted as present at theERI Special Meeting and will not be voted at the ERI Special Meeting. In the event that a quorum is not present at the ERI Special Meeting or not enough votes have been cast for the approval of the Share Issuance, ERI expects that the ERI SpecialMeeting will be adjourned to solicit additional proxies.

 

Q.

Who can vote at the ERI Special Meeting?

 

A.

Holders of ERI common stock of record at the close of business on the record date for the ERI Special Meeting,October 4, 2019, will be entitled to notice of and to vote at the ERI Special Meeting.

As of the record date for the ERISpecial Meeting, there were 77,545,678 shares of ERI common stock outstanding and entitled to vote at the ERI Special Meeting, held by approximately 491 holders of record.

A complete list of stockholders entitled to vote at the ERI Special Meeting will be available for examination by any stockholder at ERI’scorporate headquarters, 100 West Liberty Street, Suite 1150, Reno, Nevada 89501, during normal business hours for a period of ten days before the ERI Special Meeting and at the time and place of the ERI Special Meeting.

 

Q.

What is the difference between a stockholder of record and a beneficial holder of shares?

 

A.

If your shares are registered directly in your name with ERI’s transfer agent, Continental StockTransfer & Trust Company, you are considered a stockholder of record with respect to those shares. If this is the case, the stockholder proxy materials have been sent or provided directly to you by ERI.

If you hold your ERI common stock in “street name” through a bank, brokerage firm or other nominee, you should instruct such bank,brokerage firm or other nominee as to how to vote your shares of ERI common stock by carefully following the instructions that you will receive from your bank, brokerage firm or other nominee. Your shares of ERI common stock will not be voted absentyour instructions. You may be subject to an earlier deadline for voting your shares of ERI common stock. Please contact your bank, brokerage firm or other nominee with any questions.

 

Q.

How many votes do I have if I am an ERI stockholder?

 

A.

Each share of ERI common stock that you own at the close of business on the record date will entitle you to onevote on each proposal presented at the ERI Special Meeting.

 

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Q.

If I am an ERI stockholder, what happens if I abstain from voting?

 

A.

Approval of the Share Issuance requires the affirmative vote of a majority of the votes cast, in person or byproxy, on the proposal to approve the Share Issuance. Abstentions, which occur when shares are voted ABSTAIN with respect to one or more proposals, will not be counted as votes cast on, and will have no effect on the outcome of, the proposalto approve the Share Issuance.

Approval of the Delaware Conversion and the ERI A&R Nevada Charter requires theaffirmative vote of the holders of a majority of all of the outstanding shares of ERI common stock. Abstentions will have the same effect as a vote AGAINST each of the Delaware Conversion and the ERI A&R Nevada Charter.

Approval of the proposal relating to the possible adjournment of the ERI Special Meeting requires the affirmative vote of the holders of amajority of the shares present, in person or by proxy, and entitled to vote at the ERI Special Meeting, even if less than a quorum is present at the ERI Special Meeting. Abstentions will have the same effect as a vote AGAINST the adjournmentof the ERI Special Meeting.

 

Q.

Who can attend the ERI Special Meeting?

 

A.

Stockholders eligible to vote at the ERI Special Meeting, or their duly authorized proxies, may attend the ERISpecial Meeting. If you choose to attend the ERI Special Meeting, you must bring photo identification and the admission ticket that is part of your proxy card. If you hold shares in “street name” through a broker, bank, or othernominee and wish to attend the ERI Special Meeting, in addition to the above procedures, you must also bring a copy of a brokerage statement reflecting your ownership of ERI common stock as of the record date for the ERI Special Meeting. If you area representative of a corporate or institutional stockholder, you must also present proof that you are a representative of such stockholder. A valid picture identification is required for all attendees. Cameras, recording devices and otherelectronic devices will not be permitted at the ERI Special Meeting.

Regardless of whether you intend to attendthe ERI Special Meeting, you are encouraged to vote your shares of ERI common stock as promptly as possible. Voting your shares will not impact your ability to attend the ERI Special Meeting.

 

Q.

Will any other matters be presented for a vote at the ERI Special Meeting?

 

A.

ERI is not aware of any other matters that will be presented for a vote at the ERI Special Meeting. However, ifany other matters properly come before the ERI Special Meeting, the proxies will have the discretion to vote upon such matters.

 

Q.

How do I vote my shares if I am an ERI stockholder of record?

 

A.

If you are an ERI stockholder entitled to vote at the ERI Special Meeting, you may vote over the Internet, bytelephone, by mail or in person at the ERI Special Meeting. All votes, other than votes made in person at the ERI Special Meeting, must be received by 11:59 p.m., Eastern Time, on November 14, 2019:

Over the Internet or by Telephone. To vote over the Internet or by telephone, please follow the instructions included on your proxycard. If you vote over the Internet or by telephone, you do not need to complete and mail a proxy card.

Mail. By signing the proxycard and returning it in the enclosed prepaid and addressed envelope, you are authorizing the individuals named on the proxy card to vote your shares at the ERI Special Meeting in the manner you indicate. ERI and Caesars encourage you to sign andreturn the proxy card even if you plan to attend the ERI Special Meeting so that your shares will be voted if you are ultimately unable to attend the ERI Special Meeting.

 

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In Person. If your shares are registered directly in your name, you have the right tovote in person at the ERI Special Meeting. If you hold shares in “street name” through a broker, bank or other nominee and you want to vote in person at the ERI Special Meeting, you must obtain a proxy from your broker, bank or othernominee and bring that proxy to the ERI Special Meeting. If you attend the ERI Special Meeting and plan to vote in person, ERI will provide you with a ballot at the ERI Special Meeting.

 

Q.

How do I vote my shares of ERI common stock that are held in “street name” by a brokerage firm,bank or other nominee?

 

A.

If your shares are held in an account at a brokerage firm, bank or other nominee, then you are the beneficialowner of shares held in “street name” and this joint proxy statement/prospectus is being sent to you by that organization. The organization holding your account is considered to be the stockholder eligible to vote at the ERI SpecialMeeting for purposes of voting at the ERI Special Meeting. As a beneficial owner, you have the right to direct your broker, bank or other nominee how to vote the shares in your account by following the instructions that the broker, bank or othernominee provides you along with this joint proxy statement/prospectus. All of the proposals at the ERI Special Meeting are considered non-routine matters. As a result, your broker may not vote your shareswithout your specific instructions, which is called a “broker non-vote.”

 

Q.

Can I change my vote after I have delivered my proxy?

 

A.

Yes. You can change your vote at any time before your proxy is voted at the ERI Special Meeting. If you are anERI stockholder entitled to vote at the ERI Special Meeting, you may revoke your proxy at any time before the vote is taken at the ERI Special Meeting.

To revoke your proxy, you must do one of the following:

 

  

enter a new vote over the Internet or by telephone by 11:59 p.m., Eastern Time, on November 14, 2019;

 

  

sign and return another proxy card, which must be received by 11:59 p.m., Eastern Time, on November 14,2019;

 

  

provide written notice of the revocation to: Eldorado Resorts, Inc., Attention: Secretary, 100 West LibertyStreet, Suite 1150, Reno, Nevada 89501, which must be received by 11:59 p.m., Eastern Time, on November 14, 2019; or

 

  

attend the ERI Special Meeting and vote your shares in person.

If you are the beneficial owner of shares held in “street name” by a brokerage firm, bank, or other nominee, you should follow theinstructions of your broker, bank, or other nominee regarding the revocation of proxies. Please contact your broker, bank or other nominee and follow its directions in order to change your vote.

If the ERI Special Meeting is adjourned, it will not affect the ability of ERI stockholders eligible to vote at the ERI Special Meeting toexercise their voting rights or to revoke any previously granted proxy using the methods described above.

 

Q.

What if I receive more than one proxy card?

 

A.

If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts.Please sign and return all proxy cards to ensure that all of your shares are voted.

 

Q.

What if I do not specify a choice for a matter when returning a proxy?

 

A.

Stockholders should specify their choice for each matter on the enclosed proxy. If no specific instructions aregiven, proxies that are signed and returned will be voted:

 

  

FOR the proposal to approve the Share Issuance (ERI Proposal No. 1);

 

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FOR the proposal to approve the Delaware Conversion (ERI Proposal No. 2);

 

  

FOR the proposal to approve the ERI A&R Nevada Charter (ERI Proposal No. 3); and

 

  

FOR the proposal to approve one or more adjournments of the ERI Special Meeting, if appropriate, tosolicit additional proxies if there are insufficient votes to approve the Share Issuance at the time of the ERI Special Meeting (ERI Proposal No. 4).

 

Q.

As an ERI stockholder, am I eligible to receive dissenter’s rights as a result of any action taken atthe ERI Special Meeting or the Merger?

 

A.

No. Dissenter’s rights are not available for ERI stockholders as a result of any action taken at the ERISpecial Meeting or in connection with the Merger.

 

Q.

When is the Merger expected to be consummated?

 

A.

ERI and Caesars are working toward consummating the Merger as expeditiously as possible and currently expectthe Merger to be consummated in the first half of 2020. However, ERI and Caesars cannot be certain when, or if, the conditions to the consummation of the Merger will be satisfied or waived, or that the Merger will be consummated. See “RiskFactors—Risks Relating to the Merger” beginning on page 48, “The Merger—Regulatory Filings and Approvals Required to Consummate the Merger” beginning on page 188 and “The MergerAgreement—Conditions to the Obligation to Effect the Merger” beginning on page 213.

 

Q.

Are there risks associated with the Merger that I should consider in deciding how to vote?

 

A.

Yes. There are a number of risks related to the Merger and the other transactions contemplated by the MergerAgreement that are discussed in this joint proxy statement/prospectus and in the documents incorporated by reference or referred to herein. Please read with particular care the detailed description of the risks described in “RiskFactors” beginning on page 48 and in ERI’s and Caesars’ respective filings with the SEC referred to in “Where You Can Find More Information” beginning on page 270.

 

Q.

What are the U.S. federal income tax consequences of the Delaware Conversion?

 

A.

ERI believes that the reincorporation of ERI from Nevada to Delaware will constitute a reorganization withinthe meaning of Section 368(a)(1)(F) of the Code, which involves a reorganization that is a mere change in identity, form or place of organization for a corporation. Assuming that the Delaware Conversion will be treated for U.S. federal incometax purposes as a reorganization within the meaning of Section 368(a)(1)(F) of the Code, you will not recognize any gain or loss as a result of the consummation of the Delaware Conversion. For a more detailed discussion of the U.S. federalincome tax considerations generally applicable to the Delaware Conversion, see “U.S. Federal Income Tax Considerations—Tax Consequences of the Delaware Conversion” beginning on page 233.

 

Q.

Who can help answer my questions?

 

A.

If you are an ERI stockholder and have any questions about the Merger, the ERI Special Meeting or how to submityour proxy, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, you should contact:

D.F. King & Co., Inc.

48Wall Street, 22nd Floor

New York, New York 10005

Email: eldorado@dfking.com

Banksand Brokers (212) 269-5550

or

Toll-Free (800) 769-4414

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE CAESARS SPECIALMEETING

The Caesars Board is soliciting proxies from its stockholders to vote at a special meeting of Caesars stockholders, to beheld at 9:00 a.m., Pacific Time, on November 15, 2019 in the Tuscana Chapel at Caesars Palace, One Caesars Palace Drive, Las Vegas, Nevada 89109 (the “Caesars Special Meeting”), and any adjournment of the Caesars Special Meeting.

The questions and answers below highlight selected information from this joint proxy statement/prospectus and are intended to briefly addresssome commonly asked questions about, among other things, (a) the Merger Agreement and the Merger Consideration, (b) the Merger and (c) the Caesars Special Meeting, where the stockholders of Caesars will be asked to consider and voteon the adoption of the Merger Agreement, approval of the Merger and related matters.

The following questions and answers do not containall of the information that is important to you. You should carefully read this joint proxy statement/prospectus in its entirety, including the annexes and the documents incorporated by reference, to fully understand the matters to be acted upon andthe voting procedures for the Caesars Special Meeting. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions under “Where You Can Find MoreInformation” beginning on page 270.

For certain questions and answers about the ERI Special Meeting, see “Questionsand Answers about the ERI Special Meeting” beginning on page 6.

 

Q.

Why have I received this joint proxy statement/prospectus?

 

A.

You are receiving this joint proxy statement/prospectus because you were a stockholder of Caesars as of theclose of business on the record date for the Caesars Special Meeting. On June 23, 2019, the ERI Board and Caesars Board each approved the Agreement and Plan of Merger providing for Caesars to be acquired by ERI, and the Agreement and Plan ofMerger was signed on June 24, 2019 (and was subsequently amended on August 15, 2019, pursuant to Amendment No. 1 to Agreement and Plan of Merger). Copies of the Agreement and Plan of Merger and Amendment No. 1 to Agreement andPlan of Merger are attached to this joint proxy statement/prospectus as Annex A and Annex B, respectively, which ERI and Caesars encourage you to read in their entirety.

In order for the Merger to be consummated, Caesars stockholders must vote to adopt the Merger Agreement and approve the Merger. Adoption of theMerger Agreement and approval of the Merger requires the affirmative vote of the holders of a majority of the outstanding shares of Caesars common stock entitled to vote on such matters. Caesars stockholders are also being asked to vote to approve,on an advisory basis, the compensation that will or may become payable to Caesars’ named executive officers in connection with the Merger and to approve one or more adjournments of the Caesars Special Meeting, if appropriate, to solicitadditional proxies if there are insufficient votes to adopt the Merger Agreement and approve the Merger at the time of the Caesars Special Meeting.

This joint proxy statement/prospectus is being delivered to you as both a proxy statement of Caesars and a prospectus of ERI. It is a proxystatement because the Caesars Board is soliciting proxies from you to vote on the matters set forth in the notice of the Caesars Special Meeting and described in this joint proxy statement/prospectus, and your proxy will be used at the CaesarsSpecial Meeting or at any adjournment thereof. It is a prospectus because ERI will issue ERI common stock to Caesars stockholders in connection with the Merger.

 

Q.

What are the specific proposals on which I am asked to vote at the Caesars Special Meeting?

 

A.

Caesars stockholders are being asked to approve three proposals at the Caesars Special Meeting:

 

  

Caesars stockholders are being asked to approve a proposal to adopt the Merger Agreement and to approve theMerger (Caesars Proposal No. 1);

 

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Caesars stockholders are being asked to approve, on an advisory basis, the compensation that will or may becomepayable to Caesars’ named executive officers in connection with the Merger (Caesars Proposal No. 2). Because this vote is advisory in nature, it will not be binding on Caesars, and failure to receive the vote required for approval will notchange Caesars’ obligations to pay the merger-related compensation, pursuant to the terms of the applicable compensation agreements or arrangements; and

 

  

Caesars stockholders are being asked to approve one or more adjournments of the Caesars Special Meeting, ifappropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement and approve the Merger at the time of the Caesars Special Meeting (Caesars Proposal No. 3).

The approval of the advisory compensation proposal and the adjournment proposal are not conditions to consummation of the Merger.

 

Q.

How does the Caesars Board recommend that Caesars stockholders vote?

 

A.

The Caesars Board unanimously recommends that Caesars stockholders vote:

 

  

FOR the proposal to adopt the Merger Agreement and approve the Merger (Caesars Proposal No. 1);

 

  

FOR the proposal to approve, on an advisory basis, the compensation that will or may become payable toCaesars’ named executive officers in connection with the Merger (Caesars Proposal No. 2); and

 

  

FOR the proposal to approve one or more adjournments of the Caesars Special Meeting, if appropriate, tosolicit additional proxies if there are insufficient votes to adopt the Merger Agreement and approve the Merger at the time of the Caesars Special Meeting (Caesars Proposal No. 3).

For a discussion of the reasons for the recommendation on Caesars Proposal No. 1, see “The Merger—Caesars Board’sReasons for the Merger and Recommendation of the Caesars Board” beginning on page 152.

Unless you give other instructions onyour proxy card, the persons named as proxy holders on the enclosed proxy card will vote in accordance with the recommendations of the Caesars Board.

 

Q.

How many votes are required to approve each proposal?

 

A.

Caesars Proposal No. 1 requires the affirmative vote of the holders of a majority of the outstandingshares of Caesars common stock entitled to vote as of the close of business on the record date for the Caesars Special Meeting.

Caesars Proposal Nos. 2 and 3 require the affirmative vote of the holders of a majority of the shares of Caesars common stock present, inperson or by proxy, and entitled to vote at the Caesars Special Meeting.

The vote on Caesars Proposal No. 2 is advisory and is notbinding on Caesars.

 

Q.

What will I receive if the Merger is consummated?

 

A.

Upon consummation of the Merger, each share of Caesars common stock issued and outstanding immediately prior tothe consummation of the Merger (other than Caesars common stock subject to stock-based awards) will be converted into the right to receive, at your election, subject to proration:

 

  

the Cash Election Consideration, which is cash in an amount equal to the Per Share Amount; or

 

  

the Stock Election Consideration, which is a number of shares of ERI common stock equal to (a) the Per ShareAmount divided by (b) the ERI Common Stock VWAP.

In this joint proxy statement/prospectus, when the term“Merger Consideration” is used with respect to a given share of Caesars common stock, it means either the Cash Election Consideration (with respect to a share of Caesars common stock representing the right to receive the Cash ElectionConsideration) or the Stock Election Consideration (with respect to a share of Caesars common stock representing the right to receive the Stock Election Consideration).

 

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The Merger Agreement provides that the aggregate consideration paid by ERI in respect ofoutstanding shares of Caesars common stock will be (a) an amount of cash equal to the Aggregate Cash Amount and (b) a number of shares of ERI common stock equal to the Aggregate ERI Share Amount. Each holder of shares of Caesars commonstock will be entitled to elect to receive, for each share of Caesars common stock held by such holder, either an amount of cash or a number of shares of ERI common stock, with a value (based on the ERI Common Stock VWAP) equal to the Per ShareAmount. Elections by Caesars stockholders are subject to proration such that the aggregate amount of cash paid in exchange for outstanding shares of Caesars common stock in the Merger will not exceed the Aggregate Cash Amount and the aggregatenumber of shares of ERI common stock issued in exchange for shares of Caesars common stock in the Merger will not exceed the Aggregate ERI Share Amount. As such, if Caesars stockholders make a Cash Election or a Stock Election, the form of MergerConsideration they actually receive may be adjusted according to the proration procedures contained in the Merger Agreement.

Caesarsstockholders who fail to make a valid election for any reason by the Election Deadline will be deemed to have made a non-election and will have no control over the form of Merger Consideration they willreceive in exchange for their shares of Caesars common stock. The form of Merger Consideration that these non-electing stockholders receive will depend on which form of Merger Consideration is oversubscribedor undersubscribed.

 

Q.

What will happen to Caesars stock options and other stock-based awards (such as restricted stock units)?

 

A.

Subject to certain exceptions set forth in the Merger Agreement, Caesars stock options and other stock-basedawards will generally be treated as follows:

Each option to acquire Caesars common stock that is vested and outstandingas of immediately prior to the Effective Time and has a per share exercise price less than the Cash Election Consideration (each, a “Vested Caesars Stock Option”) will, as of the Effective Time, be converted into the right to receive anamount in cash equal to the product of (a) the number of “net shares” of Caesars common stock applicable to such Vested Caesars Stock Option (after taking into account the exercise price applicable to such option) and (b) theCash Election Consideration and will be cancelled as of the Effective Time.

Performance-based stock options are expected to be cancelledin connection with the consummation of the Merger.

Each option to acquire Caesars common stock that has not been cancelled and isoutstanding as of immediately prior to the Effective Time (each, a “Continuing Caesars Stock Option”) will (i) cease to represent an option or right to acquire shares of Caesars common stock and (ii) be converted into an optionor right to purchase shares of ERI common stock on the same terms and conditions as were applicable to such option immediately prior to the Effective Time. The number of shares, the exercise price per share of ERI common stock, and any other rightsof a holder of a converted Continuing Caesars Stock Option will be determined based on a formula set forth in the Merger Agreement intended to preserve the intrinsic value of such Continuing Caesars Stock Option.

Each performance stock unit of Caesars that vests based on Caesars’ level of EBITDA or adjusted EBITDA, as measured over the applicableperformance period that is outstanding as of immediately prior to the Effective Time (each, a “Caesars EBITDA PSU”) will, as of the Effective Time, be converted into the right to receive the Cash Election Consideration. For purposes ofcalculating the foregoing, the number of Caesars EBITDA PSUs will be based on “actual” performance achieved (measured through the end of the month immediately prior to the Effective Time, as proportionately extrapolated through theremainder of the applicable performance period), with respect to Caesars EBITDA PSUs that are eligible to vest in respect of the year in which the Effective Time occurs, and will be based on “target” level achievement with respect toCaesars EBITDA PSUs eligible to vest in respect of full performance periods commencing after the Closing Date.

 

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Each (A) restricted stock unit of Caesars that vests solely based on the passage oftime that is outstanding as of immediately prior to the Effective Time (each, a “Caesars Time-Based RSU”) and (B) performance stock unit of Caesars that is eligible to vest in respect of performance conditions that are based on stockor market price that is outstanding as of immediately prior to the Effective Time (each, a “Caesars Market-Based PSU”) will, as of the Effective Time, (1) be converted into a number of time-based restricted stock units or market-basedperformance stock units, as applicable, in respect of shares of ERI common stock in an amount equal to a number of shares of ERI common stock equal to (a) the Per Share Amount divided by (b) the ERI Common Stock VWAP (with aggregatedfractional shares rounded to the nearest whole share), and (2) remain subject to the same terms and conditions as were applicable to such Caesars Time-Based RSU and Caesars Market-Based PSU immediately prior to the Effective Time. In connectionwith the foregoing, the stock or market-based goals applicable to the Caesars Market-Based PSUs that convert into market-based performance stock units in respect of shares of ERI common stock will be adjusted accordingly.

Any payments made in connection with the foregoing will be subject to applicable taxes and withholdings.

 

Q.

How do I make an election for the form of Merger Consideration that I prefer?

 

A.

Caesars stockholders should carefully review and follow the instructions in the election form and otherappropriate and customary transmittal materials, which will be mailed not less than 30 days in advance of the anticipated Effective Time, or on such other date as ERI and Caesars mutually agree, to Caesars stockholders of record as of the date thatis five business days prior to such mailing date or such other date as mutually agreed by ERI and Caesars. You are not being asked to make an election at this time. Each Caesars stockholder may specify in the electionform the number of shares of Caesars common stock with respect to which the stockholder (a) elects to receive the Cash Election Consideration, (b) elects to receive the Stock Election Consideration or (c) makes no election. In thisjoint proxy statement/prospectus, we refer to an election to receive the Cash Election Consideration as a “Cash Election” and an election to receive the Stock Election Consideration as a “Stock Election.” A Caesars stockholderwho submits an election form is not required to elect the same form of Merger Consideration for all of his, her or its shares of Caesars common stock. The election form allows a stockholder to make a Cash Election for some of his, her or its sharesof Caesars common stock and a Stock Election for the remaining shares.

Caesars stockholders who fail to make a validelection for any reason by the Election Deadline, which is 5:00 p.m., New York Time, on the second business day prior to the Effective Time or such other time as mutually agreed by ERI and Caesars (and in any event, will be publicly announced by ERIat least five business days prior to the Election Deadline), will be deemed to have made a non-election and will have no control over the form of Merger Consideration that they receive in exchange for theirshares of Caesars common stock. Instead, the form of Merger Consideration they receive will depend on which form of Merger Consideration is oversubscribed or undersubscribed.

 

Q.

How do I make an election if my shares of Caesars common stock are held in “street name” by mybank, brokerage firm or other nominee?

 

A.

If you hold your Caesars common stock in “street name” through a bank, brokerage firm or othernominee, you should instruct such bank, brokerage firm or other nominee what election to make on your behalf by carefully following the instructions that you will receive from your bank, brokerage firm or other nominee. An election will not be madeon your behalf absent your instructions. You may be subject to an earlier deadline for making your election. Please contact your bank, brokerage firm or other nominee with any questions.

 

Q.

Can I change my election after the election form has been submitted?

 

A.

Yes. You may revoke or change your election at or prior to the Election Deadline by submitting a written noticeof revocation or change to the Exchange Agent or by submitting new election materials. You may not

 

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 revoke or change your election after the Election Deadline. Revocations must specify the name in which your shares are registered on the share transfer books of Caesars and any other informationthat the Exchange Agent may request. If you wish to submit a new election, you must do so in accordance with the election procedures described in this joint proxy statement/prospectus and the election form. If you instructed a bank, brokerage firmor other nominee holder to submit an election for your shares, you must follow your bank’s, brokerage firm’s or other nominee’s directions for changing those instructions. The notice of revocation must be received by the ExchangeAgent at or prior to the Election Deadline in order for the revocation or new election to be valid. If the Merger Agreement is terminated, all Cash Elections and Stock Elections will automatically be revoked and ERI will instruct the Exchange Agentto return all shares of Caesars common stock submitted or transferred to the Exchange Agent.

 

Q.

Am I guaranteed to receive what I ask for on the election form?

 

A.

No. Your election is subject to proration as set forth in the Merger Agreement and described in this jointproxy statement/prospectus. If you make a Stock Election and the Stock Election Consideration is oversubscribed, then some of your shares of Caesars common stock will be converted into the right to receive the Cash Election Consideration instead.Similarly, if you make a Cash Election and the Cash Election Consideration is oversubscribed, then some of your shares of Caesars common stock will be converted into the right to receive the Stock Election Consideration instead. Furthermore, Caesarsstockholders who fail to make a valid election for any reason by the Election Deadline will be deemed to have made a non-election and will have no control over the form of Merger Consideration they willreceive in exchange for their shares of Caesars common stock. Accordingly, you may not receive exactly the form of Merger Consolidation you elect to receive. You instead may receive a mix of the Cash Election Consideration and the Stock ElectionConsideration calculated based on (a) the number of shares of Caesars common stock making each type of election and (b) the requirements under the Merger Agreement that the aggregate amount of cash paid in exchange for outstanding sharesof Caesars common stock in the Merger will not exceed the Aggregate Cash Amount and the aggregate number of shares of ERI common stock issued in exchange for shares of Caesars common stock in the Merger will not exceed the Aggregate ERI ShareAmount.

 

Q.

What happens if I do not send an election form or it is not received by the Election Deadline?

 

A.

If the Exchange Agent does not receive a properly completed election form from you at or prior to the ElectionDeadline (together with any stock certificates or evidence of shares in book-entry form representing the shares of Caesars common stock covered by your election or a guarantee of delivery as described in the election form), then you will be deemedto have made a non-election with respect to your shares of Caesars common stock. As such, the form of Merger Consideration you receive will depend on which form of Merger Consideration is oversubscribed orundersubscribed. Caesars stockholders bear the risk of delivery of all the materials that they are required to submit to the Exchange Agent in order to properly make an election.

 

Q.

How do I calculate the value of the Merger Consideration?

 

A.

If the Merger is consummated, each share of Caesars common stock will be converted into the right toreceive, at the election of the stockholder, (a) the Stock Election Consideration or (b) the Cash Election Consideration, subject to proration such that the aggregate amount of cash paid in exchange for outstanding shares of Caesars commonstock in the Merger will not exceed the Aggregate Cash Amount and the aggregate number of shares of ERI common stock issued in exchange for shares of Caesars common stock in the Merger will not exceed the Aggregate ERI Share Amount. Caesarsstockholders can elect to receive the Stock Election Consideration for some of their shares of Caesars common stock and the Cash Election Consideration for some of their shares of Caesars common stock, subject to this proration. The Cash ElectionConsideration and the Stock Election Consideration will be determined based on the volume

 

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 weighted average price of a share of ERI common stock for the ten trading day period starting on the 11th trading day prior to the anticipated closing date of the Merger and ending on the secondtrading day prior to the anticipated closing date of the Merger, as reported by Bloomberg Finance L.P., or the ERI Common Stock VWAP. As a result, when Caesars stockholders make their election to receive the Cash Election Consideration or the StockElection Consideration, they will not know the exact value of the Cash Election Consideration or the Stock Election Consideration. A decrease in the price of ERI common stock between the time that a Caesars stockholder makes an election and the timeat which the ERI Common Stock VWAP is determined would result in a reduction in the amount of cash and value of ERI common stock to be received by Caesars stockholders. However, based on the price of ERI common stock used to calculate the MergerConsideration (the ERI Common Stock VWAP), the value of the Merger Consideration that a Caesars stockholder will receive upon consummation of the Merger will be approximately the same regardless of whether a Caesars stockholder makes a Cash Electionor the Stock Election.

Set forth below is a table showing a hypothetical range of values for the ERI Common Stock VWAP andthe corresponding Merger Consideration that a Caesars stockholder would receive if such stockholder made a Cash Election or a Stock Election, assuming there were 682,161,838 shares (which includes the Escrow Trust Shares) of Caesars common stockoutstanding (which was the number of such shares outstanding on the date of the Merger Agreement). The table does not reflect that cash will be paid in lieu of fractional shares, or any additional amounts that may be payable if the applicableclosing conditions set forth in the Merger Agreement are not satisfied by March 25, 2020.

 

Hypothetical

ERI Common

Stock VWAP

  

Per Share

Amount(1)

  

Cash Election
Consideration

  

Stock Election
Consideration

  

Value of Stock

Election

Consideration

(based on ERI

Common Stock

VWAP)

$35.00

  $11.55  $11.55  0.3299  $11.55

$36.00

  $11.64  $11.64  0.3232  $11.64

$37.00

  $11.73  $11.73  0.3169  $11.73

$38.00

  $11.82  $11.82  0.3110  $11.82

$39.00

  $11.91  $11.91  0.3053  $11.91

$40.00

  $12.00  $12.00  0.2999  $12.00

$41.00

  $12.09  $12.09  0.2948  $12.09

$42.00

  $12.18  $12.18  0.2899  $12.18

$43.00

  $12.27  $12.27  0.2852  $12.27

$44.00

  $12.36  $12.36  0.2808  $12.36

$45.00

  $12.45  $12.45  0.2766  $12.45

$46.00

  $12.54  $12.54  0.2725  $12.54

$47.00

  $12.63  $12.63  0.2686  $12.63

$48.00

  $12.72  $12.72  0.2649  $12.72

$49.00

  $12.81  $12.81  0.2613  $12.81

$50.00

  $12.90  $12.90  0.2579  $12.90

$51.00

  $12.98  $12.98  0.2546  $12.98

$52.00

  $13.07  $13.07  0.2514  $13.07

$53.00

  $13.16  $13.16  0.2484  $13.16

$54.00

  $13.25  $13.25  0.2455  $13.25

$55.00

  $13.34  $13.34  0.2426  $13.34

 

(1)

The “Per Share Amount” is equal to (a) (i) the Aggregate Cash Amount, plus (ii) the productof (A) the Aggregate ERI Share Amount and (B) the volume weighted average price of a share of ERI common stock for a ten trading day period, starting with the opening of trading on the 11th trading day prior to the anticipated Closing Dateto the closing of trading on the second to last trading day prior to the anticipated Closing Date (the “ERI Common Stock VWAP”), divided by (b) the Aggregate Caesars Share Amount.

 

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Neither ERI nor Caesars is making any recommendation as to whether Caesars stockholdersshould elect to receive the Cash Election Consideration or the Stock Election Consideration in the Merger. Caesars stockholders must make their own decision with respect to this election. No guarantee can be made that Caesars stockholders willreceive the amount of the Cash Election Consideration or the Stock Election Consideration they elect. As a result of the proration procedures in the Merger Agreement, which are described in this joint proxy statement/prospectus, Caesars stockholdersmay receive the Stock Election Consideration or the Cash Election Consideration in amounts that are different from the amounts they elect to receive.

 

Q.

May I transfer shares of Caesars common stock after making an election?

 

A.

You may transfer your shares of Caesars common stock after making an election. However, any election withrespect to those transferred shares will be automatically revoked. As a result, any transferee of such shares of Caesars common stock would need to properly make an election with respect to such shares if such transferee does not want such shares tobe treated as No Election Shares. If you made a valid election before the Election Deadline with respect to some or all of your shares of Caesars common stock and you transfer those shares after the Election Deadline, the election will beautomatically revoked and the transferee will be deemed to have made no election with respect to such shares.

 

Q.

May Caesars stockholders submit an election form even if they do not vote to adopt the Merger Agreement andapprove the transactions contemplated thereby, including the Merger?

 

A.

Yes. Caesars stockholders may submit an election form even if they fail to vote, abstain or vote againstadoption of the Merger Agreement.

 

Q.

When can I expect to receive the Merger Consideration?

 

A.

Provided that the Exchange Agent has received your properly completed election form (together with any stockcertificates or evidence of shares in book-entry form representing the shares of Caesars common stock covered by your election), you will receive from the Exchange Agent the Cash Election Consideration and/or the Stock Election Consideration towhich you are entitled promptly after the Effective Time.

For Caesars stockholders who did not properly complete anelection form, ERI will mail a letter of transmittal and instructions for surrendering certificated or book-entry shares. The mailing will commence no more than five business days after the Effective Time. Following the delivery of the letter oftransmittal and all of the outstanding shares of such Caesars stockholder to the Exchange Agent, the stockholder will receive, promptly after the Effective Time, the Merger Consideration available (consisting of Cash Election Consideration, StockElection Consideration or a combination of Cash Election Consideration and Stock Election Consideration) after ERI gives effect to all of the properly completed elections of other Caesars stockholders.

 

Q.

What happens if I am eligible to receive a fraction of a share of ERI common stock as part of the StockElection Consideration?

 

A.

If you receive the Stock Election Consideration, whether by election or due to proration, you will only receivewhole shares of ERI common stock. Each Caesars stockholder who would otherwise have been entitled to receive a fraction of a share of ERI common stock in the Merger will receive cash instead of such fraction. A Caesars stockholder who wouldotherwise have received a fraction of a share of ERI common stock will receive an amount of cash equal to such fraction of a share multiplied by the ERI Common Stock VWAP. See “The Merger Agreement—Merger Consideration”beginning on page 194.

 

Q.

Where will the ERI common stock that I may elect to receive in the Merger be traded?

 

A.

The new shares of ERI common stock issued in the Merger will be listed and tradable on NASDAQ. ERI common stockis currently traded on NASDAQ under the symbol “ERI.” Following the Merger and subject

 

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 to stockholder approval, ERI expects to change its name to Caesars Entertainment, Inc. and expects that shares of the combined company will be traded under the current Caesars symbol“CZR.”

 

Q.

When is the Merger expected to be consummated?

 

A.

ERI and Caesars are working toward consummating the Merger as expeditiously as possible and currently expectthe Merger to be consummated in the first half of 2020. However, ERI and Caesars cannot be certain when, or if, the conditions to the consummation of the Merger will be satisfied or waived, or that the Merger will be consummated. See “RiskFactors—Risks Relating to the Merger” beginning on page 48, “The Merger—Regulatory Filings and Approvals Required to Consummate the Merger” beginning on page 188 and “The MergerAgreement—Conditions to the Obligation to Effect the Merger” beginning on page 213.

 

Q.

Are there risks associated with the Merger that I should consider in deciding how to vote?

 

A.

Yes. There are a number of risks related to the Merger and the other transactions contemplated by the MergerAgreement that are discussed in this joint proxy statement/prospectus and in the documents incorporated by reference or referred to herein. Please read with particular care the detailed description of the risks described in “RiskFactors” beginning on page 48 and in ERI’s and Caesars’ respective filings with the SEC referred to in “Where You Can Find More Information” beginning on page 270.

 

Q.

What are the U.S. federal income tax consequences of the Merger?

 

A.

If you are a U.S. holder (as such term is defined below under “U.S. Federal Income TaxConsiderations”) of Caesars common stock, the receipt of the Merger Consideration in exchange for shares of Caesars common stock pursuant to the Merger generally will be a taxable transaction for U.S. federal income tax purposes. Ingeneral, for U.S. federal income tax purposes, a U.S. holder who receives the Merger Consideration in exchange for shares of Caesars common stock pursuant to the Merger will recognize gain or loss in an amount equal to the difference, if any,between (i) the fair market value of any ERI common stock received as of the date of the Merger plus the amount of any cash consideration received and (ii) the U.S. holder’s adjusted tax basis in its shares of Caesars common stock.However, in certain circumstances, a holder of Caesars common stock could be treated as receiving a dividend in an amount up to the amount of cash consideration received by such holder in the Merger. As a result of the possibility of such deemeddividend treatment, a non-U.S. holder (as such term is defined below under “U.S. Federal Income Tax Considerations”) of Caesars common stock may be subject to U.S. withholding tax at a rate of30% (or such lower rate as may be specified by an applicable income tax treaty) with respect to the cash consideration received in the Merger.

For a more detailed discussion of the U.S. federal income tax considerations generally applicable to the Merger and, with respect to non-U.S. holders of Caesars common stock, the ownership and disposition of ERI common stock received in the Merger, see “U.S. Federal Income Tax Considerations” beginning on page 227.

The tax consequences of the Merger and the ownership and disposition of ERI common stock will depend on your particular facts andcircumstances. Accordingly, you are urged to consult your own tax advisor to determine the U.S. federal income tax consequences of the Merger and the ownership and disposition of ERI common stock to you, including estate, gift, state, local or non-U.S. tax consequences of the Merger and the ownership and disposition of ERI common stock.

 

Q.

When and where is the Caesars Special Meeting?

 

A.

The Caesars Special Meeting will be held at 9:00 a.m., Pacific Time, on November 15, 2019 in the Tuscana Chapelat Caesars Palace, One Caesars Palace Drive, Las Vegas, Nevada 89109. For additional information about the Caesars Special Meeting, see “The Caesars Special Meeting” beginning on page 119.

 

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Q.

What is a quorum?

 

A.

Holders of a majority of the outstanding shares of Caesars common stock entitled to vote, represented either inperson or by proxy, constitutes a quorum for the transaction of business at the Caesars Special Meeting. Your shares are counted as present if you attend the Caesars Special Meeting in person or properly vote over the Internet, by telephone or bysubmitting a properly executed proxy card by mail. As of October 4, 2019, the record date for the Caesars Special Meeting, 679,008,043 shares of Caesars common stock were outstanding and entitled to vote (which does not include the Escrow TrustShares). Abstentions, which occur when shares are voted ABSTAIN with respect to one or more proposals, will be counted as present for the purpose of determining a quorum. If you do not provide voting instructions to your broker or othernominee, your shares of Caesars common stock will not be counted as present at the Caesars Special Meeting and will not be voted at the Caesars Special Meeting. In the event that a quorum is not present at the Caesars Special Meeting, Caesarsexpects that the Caesars Special Meeting will be adjourned to solicit additional proxies.

 

Q.

Who can vote at the Caesars Special Meeting?

 

A.

Holders of Caesars common stock of record at the close of business on the record date for the Caesars SpecialMeeting, October 4, 2019, will be entitled to notice of and to vote at the Caesars Special Meeting.

As of the recorddate for the Caesars Special Meeting, there were 679,008,043 shares of Caesars common stock outstanding and entitled to vote (which does not include the Escrow Trust Shares) at the Caesars Special Meeting, held by approximately 1,168 holders ofrecord.

A complete list of stockholders entitled to vote at the Caesars Special Meeting will be available for examination by anystockholder at Caesars’ corporate headquarters, One Caesars Palace Drive, Las Vegas, Nevada 89109, during normal business hours for a period of ten days before the Caesars Special Meeting and at the time and place of the Caesars SpecialMeeting.

 

Q.

How many votes do I have if I am a Caesars stockholder?

 

A.

Each share of Caesars common stock that you own at the close of business on the record date will entitle you toone vote on each proposal presented at the Caesars Special Meeting.

 

Q.

If I am a Caesars stockholder, what happens if I abstain from voting?

 

A.

The adoption of the Merger Agreement and the approval of the Merger by Caesars stockholders requires theaffirmative vote of the holders of a majority of the shares of Caesars common stock outstanding and entitled to vote as of the close of business on the record date for the Caesars Special Meeting. Abstentions, failures to submit a proxy or vote inperson and broker non-votes will have the same effect as a vote AGAINST the proposal to adopt the Merger Agreement and approve the Merger (Caesars Proposal No. 1).

Approval of the proposals relating to the advisory vote on certain merger-related compensation arrangements and possible adjournment of theCaesars Special Meeting requires the affirmative vote of the holders of a majority of the shares of Caesars common stock present, in person or by proxy, and entitled to vote at the Caesars Special Meeting (assuming a quorum of stockholders isrepresented in person or by proxy). Abstentions will have the same effect as a vote AGAINST these proposals (Caesars Proposal Nos. 2 and 3). Failures to submit a proxy or vote in person and brokernon-votes will have no effect on these proposals.

 

Q.

If I am a Caesars stockholder and my shares of Caesars common stock are held in “street name” by abroker, bank or other nominee, will my broker or bank vote my share for me?

 

A.

All of the proposals at the Caesars Special Meeting are considerednon-routine matters. As a result, your broker may not vote your shares without your specific instructions, which is called a “broker non-vote.”

 

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Q.

Why am I being asked to consider and vote upon a proposal to approve the compensation that will or may bepayable to Caesars’ named executive officers in connection with the Merger?

 

A.

Under SEC rules, Caesars is required to seek a non-binding, advisoryvote with respect to the compensation that will or may be paid to Caesars’ named executive officers in connection with the Merger. Because this vote is advisory in nature, it will not be binding on Caesars, and failure to receive the voterequired for approval will not change Caesars’ obligations to pay the Merger-related compensation pursuant to the terms of the applicable compensation agreements or arrangements.

 

Q.

What will happen if Caesars stockholders do not approve the golden parachute compensation?

 

A.

Approval of the compensation that will or may be payable by Caesars to its named executive officers inconnection with the Merger is not a condition to the consummation of the Merger. This vote is a non-binding advisory vote and will not be binding on Caesars, ERI or the surviving entity in the Merger.Therefore, if the Merger is consummated, this compensation, including amounts that Caesars is contractually obligated to pay, could still be payable regardless of the outcome of the advisory vote.

 

Q.

Do any of the officers or directors of Caesars have interests in the Merger that may differ from or be inaddition to my interests as a Caesars stockholder?

 

A.

In considering the recommendation of the Caesars Board that Caesars stockholders vote to adopt theMerger Agreement, to approve the advisory compensation proposal and to approve the Caesars adjournment proposal, Caesars stockholders should be aware that some of Caesars’ directors and executive officers have interests in the Merger that maybe different from, or in addition to, the interests of Caesars stockholders generally. The Caesars Board was aware of and considered these potential interests, among other matters, in evaluating and negotiating the Merger Agreement and thetransactions contemplated therein, in approving the Merger and in recommending the adoption of the Merger Agreement and the approval of the advisory compensation proposal and the Caesars adjournment proposal.

For more information and quantification of these interests, please see “The Merger—Interests of Caesars’ Directors andExecutive Officers in the Merger” beginning on page 178.

 

Q.

Are ERI stockholders voting on the Merger?

 

A.

While ERI stockholders are not required to adopt the Merger Agreement or approve the Merger, ERI stockholdersare required to approve the issuance of ERI common shares, or the Share Issuance, as part of the consideration for the Merger. If ERI stockholders do not approve the Share Issuance, the Merger cannot be consummated.

Under NASDAQ listing rules, stockholder approval is required prior to the issuance of common stock if the number of shares of common stock tobe issued in a transaction equals 20% or more of the number of shares of common stock outstanding before the issuance. The Share Issuance that will be effected in connection with the Merger will result in the issuance of a number of shares of ERIcommon stock equal to approximately 49% of the shares of ERI common stock outstanding before the Share Issuance, based on the number of shares of ERI common stock and Caesars common stock, and the principal amount of Caesars convertible notes,outstanding on September 27, 2019 (assuming that all Caesars convertible notes are converted immediately following consummation of the Merger into $8.40 in cash and 0.0899 shares of ERI common stock for each share of Caesars common stock into whichsuch Caesars convertible notes were convertible immediately prior to the Merger). Accordingly, ERI stockholders are being asked to consider and vote on the Share Issuance.

Pursuant to the Merger Agreement, ERI is also required to seek the approval by ERI stockholders of the Delaware Conversion and the ERI A&RNevada Charter. However, the consummation of the Merger is not conditioned on the approval of either the Delaware Conversion or the ERI A&R Nevada Charter. If the

 

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Delaware Conversion Proposal is not approved, ERI will remain a Nevada corporation and subject to Nevada law, and its current amended and restated articles of incorporation will continue to applyand the ERI A&R Nevada Bylaws will apply (unless the Charter Amendment Proposal is approved, in which case the ERI A&R Nevada Charter will apply). If, however, the Share Issuance Proposal and the Charter Amendment Proposal are approved butthe Delaware Conversion Proposal is not approved, following the consummation of the Merger, ERI’s current amended and restated articles of incorporation will be replaced with the ERI A&R Nevada Charter. If neither the Delaware ConversionProposal nor the Charter Amendment Proposal are approved, but the Share Issuance is approved, following consummation of the Merger ERI will remain a Nevada corporation and subject to Nevada law, and its current amended and restated articles ofincorporation will continue to apply and the ERI A&R Nevada Bylaws will apply.

 

Q.

Will any other matters be presented for a vote at the Caesars Special Meeting?

 

A.

Caesars is not aware of any other matters that will be presented for a vote at the Caesars Special Meeting.However, if any other matters properly come before the Caesars Special Meeting, the proxies will have the discretion to vote upon such matters, in their discretion.

 

Q.

How do I vote my shares of Caesars common stock that are held in “street name” by a brokeragefirm, bank or other nominee?

 

A.

If your shares are held in an account at a brokerage firm, bank or other nominee, then you are the beneficialowner of shares held in “street name” and this joint proxy statement/prospectus is being sent to you by that organization. The organization holding your account is considered to be the stockholder eligible to vote at the Caesars SpecialMeeting for purposes of voting at the Caesars Special Meeting. As a beneficial owner, you have the right to direct your broker, bank or other nominee how to vote the shares in your account by following the instructions that the broker, bank or othernominee provides you along with this joint proxy statement/prospectus. All of the proposals at the Caesars Special Meeting are considered non-routine matters. As a result, your broker may not vote yourshares without your specific instructions, which is called a “broker non-vote.”

 

Q.

Who can attend the Caesars Special Meeting?

 

A.

Stockholders eligible to vote at the Caesars Special Meeting, or their duly authorized proxies, may attend theCaesars Special Meeting. If you choose to attend the Caesars Special Meeting, you must bring photo identification and the admission ticket that is part of your proxy card. If you hold shares in “street name” through a broker, bank,or other nominee and wish to attend the Caesars Special Meeting, in addition to the above procedures, you must also bring a copy of a brokerage statement reflecting your ownership of Caesars common stock as of the record date for the Caesars SpecialMeeting. If you are a representative of a corporate or institutional stockholder, you must also present proof that you are a representative of such stockholder. A valid picture identification is required for all attendees. Cameras, recording devicesand other electronic devices are not permitted at the Caesars Special Meeting.

Regardless of whether you intendto attend the Caesars Special Meeting, you are encouraged to vote your shares of Caesars common stock as promptly as possible. Voting your shares will not impact your ability to attend the Caesars Special Meeting.

 

Q.

How do I vote my shares if I am a Caesars stockholder of record?

 

A.

If you are a Caesars stockholder entitled to vote at the Caesars Special Meeting, you may vote over theInternet, by telephone, by mail or in person at the Caesars Special Meeting. All votes, other than votes made in person at the Caesars Special Meeting, must be received by 11:59 p.m., Eastern Time, on November 14, 2019.

 

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Over the Internet or by Telephone. To vote over the Internet or by telephone, please follow theinstructions included on your proxy card. If you vote over the Internet or by telephone, you do not need to complete and mail a proxy card.

 

  

Mail. By signing the proxy card and returning it in the enclosed prepaid and addressed envelope, you areauthorizing the individuals named on the proxy card to vote your shares at the Caesars Special Meeting in the manner you indicate. ERI and Caesars encourage you to sign and return the proxy card even if you plan to attend the Caesars Special Meetingso that your shares will be voted if you are ultimately unable to attend the Caesars Special Meeting.

 

  

In Person. If your shares are registered directly in your name, you have the right to vote in person atthe Caesars Special Meeting. If you hold shares in “street name” through a broker, bank or other nominee and you want to vote in person at the Caesars Special Meeting, you must obtain a proxy from your broker, bank or other nominee andbring that proxy to the Caesars Special Meeting. If you attend the Caesars Special Meeting and plan to vote in person, Caesars will provide you with a ballot at the Caesars Special Meeting.

 

Q.

Can I change my vote after I have delivered my proxy?

 

A.

Yes. You can change your vote at any time before your proxy is voted at the Caesars Special Meeting. If you area Caesars stockholder entitled to vote at the Caesars Special Meeting, you may revoke your proxy at any time before the vote is taken at the Caesars Special Meeting.

To revoke your proxy, you must do one of the following:

 

  

enter a new vote over the Internet or by telephone by 11:59 p.m., Eastern Time, on November 14, 2019;

 

  

sign and return another proxy card, which must be received by 11:59 p.m., Eastern Time, on November 14,2019;

 

  

provide written notice of the revocation to: Caesars Entertainment Corporation, Attention: Corporate Secretary,One Caesars Palace Drive, Las Vegas, Nevada 89109, which must be received by 11:59 p.m., Eastern Time, on November 14, 2019; or

 

  

attend the Caesars Special Meeting and vote your shares in person.

If you are the beneficial owner of shares held in “street name” by a brokerage firm, bank or other nominee, you should follow theinstructions of your broker, bank or other nominee regarding the revocation of proxies. Please contact your broker, bank or other nominee and follow its directions in order to change your vote.

If the Caesars Special Meeting is adjourned, it will not affect the ability of Caesars stockholders eligible to vote at the Caesars SpecialMeeting to exercise their voting rights or to revoke any previously granted proxy using the methods described above.

 

Q.

What if I receive more than one proxy card?

 

A.

If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts.Please sign and return all proxy cards to ensure that all of your shares are voted.

 

Q.

What do I need to do now to vote my shares?

 

A.

After carefully reading and considering the information contained in this joint proxy statement/prospectus,please respond by completing, signing and dating the appropriate proxy card or voting instruction card and returning it in the enclosed postage-paid envelope, or, if available, by submitting your voting instruction over the Internet or by telephone,as soon as possible so that your shares of Caesars common stock may be

 

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 represented and voted at the Caesars Special Meeting. In addition, you may also vote your shares in person at the Caesars Special Meeting. If you hold shares registered in the name of a broker,bank, or other nominee, that broker, bank, or other nominee has enclosed, or will provide, instructions for directing your broker, bank or other nominee how to vote those shares.

 

Q.

Should I send in my stock certificates (or evidence of shares in book-entry form) with my proxy card?

 

A.

No. Please do NOT send your Caesars stock certificates (or evidence of shares in book-entry form) with yourproxy card. As described under “The Merger—Electing the Form of Merger Consideration” beginning on page 175, an election form and other appropriate and customary transmittal materials will be mailed not less than 30 days inadvance of the anticipated Effective Time, or on such other date as ERI and Caesars mutually agree, to Caesars stockholders of record as of the date that is five business days prior to such mailing date or such other date as mutually agreed by ERIand Caesars, describing how you may exchange your shares of Caesars common stock for the Merger Consideration. If your shares of Caesars common stock are held in “street name” through a brokerage firm, bank or other nominee, you willreceive instructions from your brokerage firm, bank or other nominee as to how to effect the surrender of your “street name” shares of Caesars common stock in exchange for the Merger Consideration.

 

Q.

As a Caesars stockholder, am I entitled to appraisal rights in connection with the Merger?

 

A.

Yes. Pursuant to Section 262 of the DGCL, Caesars stockholders who do not vote in favor of adoption of theMerger Agreement and approval of the Merger, who continuously hold their shares of Caesars common stock through the Effective Time and who otherwise comply precisely with the applicable requirements of Section 262 of the DGCL have the right toseek appraisal of the fair value of their shares of Caesars common stock, as determined by the Delaware Court of Chancery, if the Merger is consummated. See “Appraisal Rights of Caesars Stockholders” beginning on page 258.

 

Q.

Who can help answer my questions?

 

A.

If you are a Caesars stockholder and have any questions about the Merger, the Caesars Special Meeting or how tosubmit your proxy, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, you should contact:

Morrow Sodali LLC

470 West Avenue

Stamford, Connecticut 06902

Banks and Brokerage Firms Call: (203) 658-9400

Stockholders Call Toll-Free: (800) 662-5200

Email: CZR@morrowsodali.com

 

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SUMMARY

This summary highlights selected information from this joint proxy statement/prospectus and may not contain all the information that isimportant to you. To understand the Merger fully and for a more complete description of the legal terms of the Merger, you should carefully read this entire joint proxy statement/prospectus and the other documents to which you are referred. Pleasealso refer to “Where You Can Find More Information” beginning on page 270. Page references are included to direct you to a more complete description of the topics presented in this summary.

The Companies (page 64)

ERI and Merger Sub

ERI is ageographically diversified gaming and hospitality company with twenty-six gaming facilities in twelve U.S. states as of the date of this joint proxy statement/prospectus. ERI’s properties, which arelocated in Ohio, Louisiana, Nevada, New Jersey, West Virginia, Colorado, Florida, Iowa, Mississippi, Illinois, Indiana and Missouri, feature approximately 28,000 slot machines and video lottery terminals, approximately 750 table games andapproximately 12,600 hotel rooms. ERI’s primary source of revenue is generated by gaming operations, and ERI utilizes its hotels, restaurants, bars, entertainment, racing, retail shops and other services to attract customers to its properties.ERI was founded in 1973 in Reno, Nevada as a family business by the Carano family. ERI has been publicly traded since September 22, 2014 and its common stock currently trades on NASDAQ under the symbol “ERI.”

ERI’s principal executive offices are located at 100 West Liberty Street, Suite 1150, Reno, Nevada 89501 and the telephone number at thatlocation is (775) 328-0100.

Merger Sub is a Delaware corporation and a direct wholly ownedsubsidiary of ERI. Merger Sub was incorporated on June 20, 2019 solely for the purpose of effecting the Merger pursuant to the Merger Agreement. Merger Sub has not carried on any activities other than in connection with the Merger.

Additional information about ERI and its subsidiaries is included in the ERI documents incorporated by reference into this joint proxystatement/prospectus. Please refer to “Where You Can Find More Information” beginning on page 270.

Caesars

Caesars is primarily a holding company with no independent operations of its own. Caesars operates its business primarily through its whollyowned subsidiaries CEOC, LLC (“CEOC LLC”) and Caesars Resort Collection, LLC (“CRC”). Caesars operates a total of fifty-four properties in fourteen U.S. states and five countries outside of the United States, including fiftycasino properties. Nine casinos are in Las Vegas, which represented 45% of net revenues for the six months ended June 30, 2019.

Caesars began operations in 1937 and its common stock currently trades on NASDAQ under the symbol “CZR.”

Caesars’ principal executive offices are located at One Caesars Palace Drive, Las Vegas, Nevada 89109 and the telephone number at thatlocation is (702) 407-6000.

Additional information about Caesars and Caesars’ subsidiariesis included in the Caesars documents incorporated by reference into this joint proxy statement/prospectus. Please refer to “Where You Can Find More Information” beginning on page 270.



 

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The ERI Special Meeting (page 105)

The ERI Special Meeting will be held at 9:00 a.m., Pacific Time, on November 15, 2019 at Eldorado Resort Casino, 345 N. Virginia St., Reno,Nevada 89501.

Only holders of ERI common stock as of the close of business on October 4, 2019, which is the record date for the ERISpecial Meeting, are entitled to receive notice of, attend and vote at the ERI Special Meeting. If you own shares of ERI common stock that are registered in the name of someone else, such as a bank, broker or other nominee, you need to direct thatperson to vote those shares or obtain an authorization from them to vote the shares, provide identification in the form of a copy of a brokerage statement (in a name matching your photo identification) reflecting your stock ownership as of therecord date for the ERI Special Meeting and vote the shares yourself at the ERI Special Meeting. As of the close of business on the record date for the ERI Special Meeting, there were 77,545,678 shares of ERI common stock outstanding.

The ERI Special Meeting is being held for the following purposes:

 

  

approval of the Share Issuance;

 

  

approval of the Delaware Conversion;

 

  

approval of the ERI A&R Nevada Charter;

 

  

approval of one or more adjournments of the ERI Special Meeting, if appropriate, to solicit additional proxies ifthere are insufficient votes to approve the Share Issuance at the time of the ERI Special Meeting; and

 

  

such other business as may properly come before the ERI Special Meeting.

Shares Owned by ERI Directors and Executive Officers (page 107)

At the close of business on October 4, 2019, the record date for the ERI Special Meeting, directors and executive officers of ERI beneficiallyowned and were entitled to vote, in the aggregate, approximately 1,080,368 issued and outstanding shares of ERI common stock, representing approximately 1.39% of the shares of ERI common stock outstanding on that date. The directors and executiveofficers of ERI have informed ERI that they intend to vote all of the shares of ERI common stock they are entitled to vote (a) FOR the proposal to approve the Share Issuance, (b) FOR the proposal to approve the DelawareConversion, (c) FOR the proposal to approve the ERI A&R Nevada Charter and (d) FOR the proposal to approve one or more adjournments of the ERI Special Meeting, if appropriate. For a more detailed discussion of thebeneficial ownership of directors and officers of ERI, see “Beneficial Ownership of ERI Common Stock” beginning on page 263.

The Caesars Special Meeting (page 119)

The Caesars Special Meeting will be held at 9:00 a.m., Pacific Time, on November 15,2019, in the Tuscana Chapel at Caesars Palace, One Caesars Palace Drive, Las Vegas, Nevada 89109.

Only holders of Caesars common stock asof the close of business on October 4, 2019, which is the record date for the Caesars Special Meeting, are entitled to receive notice of, attend and vote at the Caesars Special Meeting. If you own shares of Caesars common stock that are registeredin the name of someone else, such as a bank, broker or other nominee, you need to direct that person to vote those shares or obtain an authorization from them to vote the shares, provide identification in the form of a copy of a brokerage statement(in a name matching your photo identification) reflecting your stock ownership as of the record date for the Caesars Special Meeting and vote the shares yourself at the Caesars Special Meeting. As of the close of business on the record date for theCaesars Special Meeting, there were 679,008,043 shares of Caesars common stock outstanding and entitled to vote (which does not include the Escrow Trust Shares).



 

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The Caesars Special Meeting is being held for the following purposes:

 

  

approval of the Merger Agreement and the Merger;

 

  

approval, on an advisory basis, of the compensation that will or may become payable to Caesars’ namedexecutive officers in connection with the Merger;

 

  

approval of one or more adjournments of the Caesars Special Meeting, if appropriate, to solicit additionalproxies if there are insufficient votes to adopt the Merger Agreement and approve the Merger at the time of the Caesars Special Meeting; and

 

  

such other business as may properly come before the Caesars Special Meeting.

Shares Owned by Caesars Directors and Executive Officers (page 121)

At the close of business on October 4, 2019, the record date for the Caesars Special Meeting, directors and executive officers of Caesarsbeneficially owned and were entitled to vote, in the aggregate, approximately 1,637,261 issued and outstanding shares of Caesars common stock, representing approximately 0.24% of the shares of Caesars common stock outstanding and entitled to vote onthat date. The directors and executive officers of Caesars have informed Caesars that they intend to vote all of the shares of Caesars common stock they are entitled to vote (a) FOR the proposal to adopt the Merger Agreement and approvethe Merger, (b) FOR the proposal to approve, on an advisory basis, the compensation that will or may become payable to Caesars’ named executive officers in connection with the Merger, and (c) FOR the proposal toapprove one or more adjournments of the Caesars Special Meeting, if appropriate. For a more detailed discussion of the beneficial ownership of directors and officers of Caesars, see “Beneficial Ownership of Caesars Common Stock”beginning on page 265.

The Merger (page 128)

Merger Consideration (page 172)

At the Effective Time, by virtue of the Merger and without any action on the part of ERI, Merger Sub or Caesars, each share of Caesars commonstock issued and outstanding immediately prior to the Effective Time (other than shares of Caesars common stock issued and outstanding immediately prior to the Effective Time that are (a) owned or held in treasury by Caesars or owned by ERI,any of its subsidiaries or Merger Sub (“Cancelled Shares”) or (b) held by a holder of record who did not vote in favor of the adoption of the Merger Agreement and is entitled pursuant to, and who complies in all respects with,Section 262 of the DGCL) will be converted automatically into, and shall thereafter represent, the right to receive, at the election of the holders of such shares, subject to proration, either:

 

  

the Cash Election Consideration, which is cash in an amount equal to the Per Share Amount; or

 

  

the Stock Election Consideration, which is a number of shares of ERI common stock equal to (a) the Per ShareAmount divided by (b) the ERI Common Stock VWAP.

In this joint proxy statement/prospectus, when the term“Merger Consideration” is used with respect to a given share of Caesars common stock, it means either the Cash Election Consideration (with respect to a share of Caesars common stock representing the right to receive the Cash ElectionConsideration) or the Stock Election Consideration (with respect to a share of Caesars common stock representing the right to receive the Stock Election Consideration).

Elections by Caesars stockholders are subject to proration such that the aggregate amount of cash paid in exchange for outstanding shares ofCaesars common stock in the Merger will not exceed the Aggregate Cash Amount and the aggregate number of shares of ERI common stock issued in exchange for shares of Caesars



 

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common stock in the Merger will not exceed the Aggregate ERI Share Amount. As such, if Caesars stockholders make a Cash Election or a Stock Election, the form of Merger Consideration theyactually receive may be adjusted according to the proration procedures contained in the Merger Agreement.

The Cash Election Considerationand the Stock Election Consideration will be determined based on the volume weighted average price of a share of ERI common stock for the ten trading day period starting on the 11th trading day prior to the anticipated Closing Date and ending on thesecond trading day prior to the anticipated Closing Date, as reported by Bloomberg Finance L.P., or the ERI Common Stock VWAP. As a result, when Caesars stockholders make their election to receive the Cash Election Consideration or the StockElection Consideration, they will not know the exact value of the Cash Election Consideration or the Stock Election Consideration. A decrease in the price of ERI common stock between the time that a Caesars stockholder makes an election and the timeat which the ERI Common Stock VWAP is determined would result in a reduction in the amount of cash and value of ERI common stock to be received by Caesars stockholders. However, based on the price of ERI common stock used to calculate the MergerConsideration (the ERI Common Stock VWAP), the value of the Merger Consideration that a Caesars stockholder will receive upon consummation of the Merger will be approximately the same regardless of whether a Caesars stockholder elects to receive theCash Election Consideration or the Stock Election Consideration.

Assuming that (i) the ERI Common Stock VWAP was equal to theclosing price of ERI common stock on September 27, 2019 of $38.56 and (ii) the Aggregate Caesars Share Amount was equal to the number of shares of Caesars common stock outstanding as of September 27, 2019, or 687,271,018 shares(which includes the Escrow Trust Shares), (A) the Per Share Amount and the Cash Election Consideration would be equal to $11.87 and (B) the Stock Election Consideration would be equal to 0.3077 shares of ERI common stock.

Neither ERI nor Caesars is making any recommendation as to whether Caesars stockholders should elect to receive the Cash ElectionConsideration or the Stock Election Consideration in the Merger. Caesars stockholders must make their own decision with respect to such an election. No guarantee can be made that Caesars stockholders will receive the amount of the Cash ElectionConsideration or the Stock Election Consideration they elect. As a result of the proration procedures in the Merger Agreement, which are described in this joint proxy statement/prospectus, Caesars stockholders may receive the Stock ElectionConsideration or the Cash Election Consideration in amounts that are different from the amounts they elect to receive.

Ownership of ERIFollowing the Merger (page 177)

Based on the number of shares of Caesars common stock and the principal amount ofCaesars convertible notes outstanding as of September 27, 2019, Caesars stockholders who receive shares of ERI common stock in exchange for their shares of Caesars common stock in the Merger and holders of Caesars convertible notes (assuming thatall Caesars convertible notes are converted immediately following consummation of the Merger into $8.40 in cash and 0.0899 shares of ERI common stock for each share of Caesars common stock into which such Caesars convertible notes were convertibleimmediately prior to the Merger), on the one hand, and ERI stockholders, on the other hand, will own in the aggregate approximately 49% and 51%, respectively, of the outstanding shares of ERI common stock. Based on the terms of the indenturegoverning the Caesars convertible notes (see “Note 2—Calculation of Purchase Consideration” under “Unaudited Pro Forma Condensed Combined Financial Statements”), the mix of cash and ERI common stock payable uponconversion of the Caesars convertible notes will likely differ from the assumed amounts.

After the consummation of the Merger, each ERIstockholder will have the same number of shares of ERI common stock that such stockholder held immediately prior to the consummation of the Merger. However, upon



 

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the Share Issuance, each share of ERI common stock outstanding immediately prior to the consummation of the Merger will represent a smaller percentage of the aggregate number of shares of ERIcommon stock outstanding after the consummation of the Merger. On the other hand, each share of ERI common stock will then represent an equity interest in a company with more assets.

Effects of the Merger (page 172)

At the Effective Time, by virtue of the Merger and without any action on the part of ERI, Merger Sub or Caesars, each share of Caesars commonstock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) will be converted automatically into the Merger Consideration (as described above), and each issued and outstanding share ofcommon stock of Merger Sub will be converted into one share of common stock of Caesars (as the surviving corporation of the Merger).

RegulatoryFilings and Approvals Required to Consummate the Merger (page 188)

The transactions contemplated by the MergerAgreement require ERI and Caesars to obtain regulatory approval under the HSR Act and the rules promulgated thereunder by the FTC. ERI and Caesars have agreed to cooperate and use reasonable best efforts to obtain such regulatory approval. For anacquisition transaction meeting certain size thresholds, such as the Merger, the HSR Act requires the parties to file notification and report forms with the Antitrust Division of the DOJ and the Premerger Notification Office of the FTC and toobserve specified required waiting periods before consummating the transaction, subject to any request for and grant of early termination.

Consummation of the Merger is also conditioned on the receipt of approvals from a number of gaming regulatory authorities, including, amongothers, the Ak Chin Community Tribal Gaming Commission, the Arizona Department of Gaming, the Cherokee Tribal Gaming Commission, the Colorado Division of Gaming, the Illinois Gaming Board, the Indiana Gaming Commission, the Indiana Horse RacingCommission, the Iowa Racing and Gaming Commission, the Kentucky Horse Racing Commission, the Louisiana Gaming Control Board, the Louisiana State Racing Commission, the Maryland Lottery and Gaming Control Agency, the Mississippi Gaming Commission,the Missouri Gaming Commission, the National Indian Gaming Commission, the Nevada Gaming Commission, the New Jersey Casino Control Commission, the New Jersey Division of Gaming Enforcement, the Pennsylvania Gaming Control Board, the PennsylvaniaState Horse Racing Commission, the Ohio Lottery Commission, the Gauteng Gambling Board (South Africa), the Alcohol and Gaming Commission of Ontario, the Ministry of Culture, Sports and Tourism (Korea) and the Gambling Commission (United Kingdom).

Composition of the ERI Board and Management Following the Merger (page 189)

ERI is required to take all actions within its power as necessary or appropriate such that immediately following the Effective Time the ERIBoard will consist of up to eleven directors to be designated by ERI as follows:

 

  

so long as Thomas R. Reeg has not Ceased to Serve, (a) five Eligible Members of the Caesars Board and(b) six members of the ERI Board as of immediately prior to the Effective Time;

 

  

if Thomas R. Reeg has Ceased to Serve, (a) six Eligible Members of the Caesars Board and (b) fivemembers of the ERI Board as of immediately prior to the Effective Time; or

 

  

if Thomas R. Reeg and Gary L. Carano have Ceased to Serve, (a) five Eligible Members of the Caesars Boardand (b) four members of the ERI Board as of immediately prior to the Effective Time.

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as a member of the ERI Board (i) due to a final and binding determination by a governmental entity that such individual is not suitable to serve, or otherwise may not serve, as a member ofthe ERI Board or (ii) because a governmental entity is likely to determine that such individual is not suitable to serve, or otherwise may not serve, as a member of the ERI Board. “Eligible Members” means individuals who are membersof the Caesars Board as of immediately prior to the mailing date of this joint proxy statement/prospectus and have agreed to serve as members of the ERI Board.

Immediately following the Effective Time, the ERI Board is expected to consist of current ERI directors Thomas R. Reeg, Gary L. Carano, DavidP. Tomick, Frank J. Fahrenkopf Jr., Michael E. Pegram and Bonnie S. Biumi, and current Caesars directors Keith Cozza, Janis Jones Blackhurst, Don Kornstein, Courtney Mather and James Nelson.

It is expected that the existing executive officers of ERI will continue to manage the combined company following the consummation of theMerger.

Accounting Treatment of the Merger (page 190)

The Merger will be accounted for by ERI using the acquisition method of accounting. Under this method of accounting, the purchase price will beallocated to the fair value of the net assets acquired, including the recognition of intangibles. The excess purchase price over the fair value of the assets acquired, if any, will be allocated to goodwill.

ERI Board’s Reasons for the Merger (page 142)

In the course of reaching its decision to approve the Merger Agreement, the ERI Board considered a number of factors in its deliberations.Those factors are described under “The Merger—ERI Board’s Reasons for the Merger” beginning on page 142.

Opinion of ERI’s Financial Advisor (page 145 and Annex J)

Pursuant to an engagement letter, dated June 3, 2019, ERI retained J.P. Morgan as its financial advisor in connection with the proposedMerger.

At the meeting of the ERI Board on June 23, 2019, J.P. Morgan rendered its oral opinion to the ERI Board that, as of suchdate and based upon and subject to the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in preparing the opinion, the Aggregate Cash Amount and the Aggregate ERI Share Amount(together, the “Aggregate Consideration”) to be paid by ERI in the proposed Merger was fair, from a financial point of view, to ERI. J.P. Morgan confirmed its June 23, 2019, oral opinion by delivering its written opinion, datedJune 23, 2019, to the ERI Board that, as of such date, the Aggregate Consideration in the proposed Merger was fair, from a financial point of view, to ERI.

The full text of the written opinion of J.P. Morgan, dated June 23, 2019, which sets forth the assumptions made, procedures followed,matters considered and limitations on the review undertaken by J.P. Morgan in preparing the opinion, is attached as Annex J to this joint proxy statement/prospectus and is incorporated herein by reference. The summary of the opinion of J.P. Morganset forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. ERI stockholders are urged to read the opinion in its entirety. J.P. Morgan’s opinion was addressed to the ERI Board(in its capacity as such) in connection with and for the purposes of its evaluation of the proposed Merger, was directed only to the Aggregate Consideration in the proposed Merger and did not address any other aspect of the proposed Merger. Theopinion does not constitute a recommendation to any stockholder of ERI as to how such stockholder should vote with respect to the proposed Merger or any other matter. For a description of the opinion that the ERI Board received from J.P. Morgan, seethe section entitled “The Merger—Opinion of ERI’s Financial Advisor” beginning on page 145.



 

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Recommendations of the ERI Board (pages 110, 115, 117 and 118)

The ERI Board unanimously recommends that ERI stockholders vote FOR each of the following proposals to be presented at the ERISpecial Meeting:

 

  

to approve the Share Issuance;

 

  

to approve the Delaware Conversion;

 

  

to approve the ERI A&R Nevada Charter; and

 

  

to approve one or more adjournments of the ERI Special Meeting, if appropriate, to solicit additional proxies ifthere are insufficient votes to approve the Share Issuance at the time of the ERI Special Meeting.

Interests of Certain ERI Directors and Executive Officers in the Merger (page 178)

In considering the recommendation of the ERI Board that ERI stockholders vote “FOR” the Share Issuance, ERI stockholdersshould be aware that certain executive officers and directors of ERI have interests in the Merger that may be different from, or in addition to, the interests of ERI stockholders generally. The ERI Board was aware of and considered these interests,among other matters, when they approved the Merger Agreement and recommended that ERI stockholders approve the Share Issuance.

As of thedate of this joint proxy statement/prospectus, it is expected that ERI’s executive officers will continue to serve as the executive officers of the combined company following the consummation of the Merger. The consummation of the Merger willnot constitute a “change in control” under the employment agreements between ERI and its executive officers, nor will it constitute a “change in control” under the Eldorado Resorts, Inc. 2015 Equity Incentive Plan, as amendedfrom time to time (the “2015 Plan”), which is the equity-based compensation plan in which ERI’s executive officers participate. Equity-based awards under the 2015 Plan will remain outstanding and continue to be governed by the sameterms and conditions that applied prior to the consummation of the Merger. In the event that the employment of any of ERI’s executive officers terminates in connection with the Merger, the existing agreements between ERI and its executiveofficers will continue to govern each officer’s entitlement to severance benefits.

A complete description of the estimated potentialpayments due to ERI’s named executive officers in connection with certain termination events is set forth in ERI’s 2019 Proxy Statement filed on Schedule 14A under the headings “Employment Agreements” and “Potential PaymentsUpon Termination or Change in Control Table.” See “Where You Can Find More Information” beginning on page 270.

Pursuant to the terms of the existing award agreements, any unvested equity awards held by ERI directors who cease to serve on the ERI Boardupon the consummation of the Merger will vest, as a result of such director’s cessation of service on the ERI Board.

In connectionwith the Merger, ERI’s compensation committee has the discretion to implement a retention program in order to properly incentivize and retain certain employees during the transition period. As of the date of this joint proxystatement/prospectus, no decisions have been made nor any awards granted under the retention program.

Caesars Board’sReasons for the Merger (page 152)

In the course of reaching its decision to approve the Merger Agreement, the CaesarsBoard considered a number of factors in its deliberations. Those factors are described in “The Merger—Caesars Board’s Reasons for the Merger and Recommendation of the Caesars Board” beginning on page 152.



 

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Opinion of Caesars’ Financial Advisor (page 157 andAnnex K)

At a meeting of the Caesars Board, PJT Partners LP (“PJT Partners”) rendered its oral opinion, subsequentlyconfirmed in its written opinion dated June 24, 2019, to the Caesars Board that, based upon and subject to the assumptions, limitations and qualifications stated in its written opinion, that as of the date thereof, the Merger Consideration tobe received by the holders of shares of Caesars common stock in the Merger was fair to such holders from a financial point of view. The implied Merger Consideration to be received by the holders of shares of Caesars common stock in the Merger, as ofthe date of the opinion, was equal to $13.00 per share of Caesars common stock (calculated as the sum of (i) $8.40 in cash and (ii) the implied value of 0.0899 shares of ERI common stock based on the closing trading price of ERI common stock asof June 21, 2019).

The full text of the written opinion of PJT Partners, dated June 24, 2019, which sets forth theassumptions made, procedures followed, factors considered and limitations upon the review undertaken by PJT Partners in rendering its opinion, is attached to this joint proxy statement/prospectus as Annex K and incorporated by reference herein. Youare encouraged to read the opinion carefully in its entirety. The summary of the PJT Partners opinion contained in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of PJT Partners’ writtenopinion. PJT Partners’ advisory services and opinion were provided for the information and assistance of the Caesars Board in connection with its consideration of the Merger and the opinion does not constitute a recommendation as to any actionthe Caesars Board should take with respect to the Merger or how any holder of Caesars common stock should vote with respect to the Merger or any other matter.

Recommendation of the Caesars Board (pages 125, 126 and 127)

The Caesars Board unanimously recommends that Caesars stockholders vote FOR each of the following proposals to be presented at theCaesars Special Meeting:

 

  

to adopt the Merger Agreement and approve the Merger;

 

  

to approve, on an advisory basis, the compensation that will or may become payable to Caesars’ namedexecutive officers in connection with the Merger (the “advisory compensation proposal”); and

 

  

to approve one or more adjournments of the Caesars Special Meeting, if appropriate, to solicit additional proxiesif there are insufficient votes to adopt the Merger Agreement and approve the Merger at the time of the Caesars Special Meeting (the “Caesars adjournment proposal”).

Interests of Caesars’ Directors and Executive Officers in the Merger (page 178)

In considering the information described in this joint proxy statement/prospectus, you should be aware that Caesars’ directors andexecutive officers may have interests in the Merger that may be different from, or in addition to, those of Caesars stockholders generally, and those circumstances may create potential conflicts of interest. In addition to the rights described belowwith respect to equity awards, the executive officers of Caesars may be eligible to receive some of the generally applicable benefits described in “The Merger—Interests of Caesars’ Directors and Executive Officers in theMerger” beginning on page 178. The Caesars Board was aware of and considered these potential interests, among other matters, in evaluating and negotiating the Merger Agreement and the transactions contemplated therein, in approving theMerger and in recommending the adoption of the Merger Agreement and approval of the Merger and the approval of the advisory compensation proposal and the Caesars adjournment proposal.

The Merger Agreement (page 193)

Copies of the Agreement and Plan of Merger and Amendment No. 1 to Agreement and Plan of Merger are attached to this joint proxystatement/prospectus as Annex A and Annex B, respectively. You are encouraged to



 

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read the Merger Agreement carefully and in its entirety because it is the principal document governing the Merger.

Treatment of Caesars Equity Awards (page 180)

Subject to certain exceptions set forth in the Merger Agreement, Caesars stock options and other stock-based awards will generally be treatedas follows:

Each Vested Caesars Stock Option will, as of the Effective Time, be converted into the right to receive an amount in cashequal to the product of (i) the number of “net shares” of Caesars common stock applicable to such Vested Caesars Stock Option (after taking into account the exercise price applicable to such option) and (ii) the Cash ElectionConsideration and will be cancelled as of the Effective Time.

Performance-based stock options are expected to be cancelled in connectionwith the consummation of the Merger.

Each Continuing Caesars Stock Option will (a) cease to represent an option or right to acquireshares of Caesars common stock and (b) be converted into an option or right to purchase shares of ERI common stock on the same terms and conditions as were applicable to such option immediately prior to the Effective Time. The number of shares,the exercise price per share of ERI common stock, and any other rights of a holder of a converted Continuing Caesars Stock Option will be determined based on a formula set forth in the Merger Agreement intended to preserve the intrinsic value ofsuch Continuing Caesars Stock Option.

Each Caesars EBITDA PSU will, as of the Effective Time, be converted into the right to receive theCash Election Consideration. For purposes of calculating the foregoing, the number of Caesars EBITDA PSUs will be based on “actual” performance achieved (measured through the end of the month immediately prior to the Effective Time, asproportionately extrapolated through the remainder of the applicable performance period), with respect to Caesars EBITDA PSUs that are eligible to vest in respect of the year in which the Effective Time occurs, and will be based on“target” level achievement with respect to Caesars EBITDA PSUs eligible to vest in respect of full performance periods commencing after the Closing Date.

Each (1) Caesars Time-Based RSU and (2) Caesars Market-Based PSU will, as of the Effective Time, (a) be converted into a numberof time-based restricted stock units or market-based performance stock units, as applicable, in respect of shares of ERI common stock in an amount equal to a number of shares of ERI common stock equal to (i) the Per Share Amount divided by(ii) the ERI Common Stock VWAP (with aggregated fractional shares rounded to the nearest whole share), and (b) remain subject to the same terms and conditions as were applicable to such Caesars Time-Based RSU and Caesars Market-Based PSUimmediately prior to the Effective Time. In connection with the foregoing, the stock or market-based goals applicable to the Caesars Market-Based PSUs that convert into market-based performance stock units in respect of shares of ERI will beadjusted accordingly.

No Solicitation of Alternative Proposals (page 205)

Each of ERI and Caesars has agreed that, from and after the date of the Merger Agreement until the Effective Time or, if earlier, the date onwhich the Merger Agreement is terminated, it will not, and will cause its subsidiaries and their respective directors, officers and employees not to, and will use its reasonable best efforts to cause its and its subsidiaries’ representativesnot to, directly or indirectly:

 

  

solicit, initiate or knowingly facilitate or knowingly encourage any inquiries regarding, or the making of anyproposal or offer that constitutes, or would reasonably be expected to lead to a Takeover Proposal (as defined in “The Merger Agreement—No Solicitation of Alternative Proposals” beginning on page 205);



 

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engage in, continue or otherwise participate in any substantive discussions or negotiations regarding, or furnishto any other person any non-public information in connection with or for the purpose of encouraging or facilitating, a Takeover Proposal; or

 

  

approve, recommend or enter into, or propose to approve, recommend or enter into, any letter of intent or similardocument, agreement, commitment or agreement in principle providing for a Takeover Proposal.

Notwithstanding therestrictions described above, the Merger Agreement provides that, (a) if at any time from and after the Merger Agreement and (i) prior to the Caesars stockholders’ adoption of the Merger Agreement, Caesars, or (ii) prior to ERIstockholders’ approval of the Share Issuance, ERI, directly or indirectly receives a bona fide, unsolicited written Takeover Proposal made after the date of the Merger Agreement from any person and such party, its affiliates and theirrespective representatives are not in material breach of the restrictions above and (b) if the Caesars Board or the ERI Board determines in good faith, after consultation with its outside legal counsel, that such Takeover Proposal constitutesor would reasonably be expected to lead to a Superior Proposal (as defined in “The Merger Agreement—No Solicitation of Alternative Proposals” beginning on page 205), and failure to take such action would be reasonablylikely to be inconsistent with its fiduciary duties under applicable Law, then such party and its representatives may, directly or indirectly, (1) furnish, pursuant to any customary confidentiality agreement that contains provisions that are noless favorable in the aggregate to Caesars than those applicable to ERI or vice versa (an “Acceptable Confidentiality Agreement”), information (including non-public information) with respect to suchparty and its subsidiaries, and afford access to the business, properties, assets, employees, officers, contracts, books and records of such party and its subsidiaries, to the person that has made such Takeover Proposal and its representatives andpotential sources of funding (provided such party must substantially concurrently with the delivery to such person, provide to the other parties any non-public information concerning such party or any of itssubsidiaries that is provided or make available to such person or its representatives unless already so provided or made available) and (2) engage in or otherwise participate in discussions or negotiations with the person making such TakeoverProposal (including as a part thereof, making counterproposals) and its representatives and potential sources of financing regarding such Takeover Proposal.

Except as permitted below, the Caesars Board and the ERI Board may not:

 

  

effect an Adverse Recommendation Change (as defined in “The Merger Agreement—No Solicitation ofAlternative Proposals” beginning on page 205); or

 

  

authorize, cause or permit Caesars or any of its subsidiaries (in the case of the Caesars Board) or ERI or any ofits subsidiaries (in the case of the ERI Board), to enter into any letter of intent, agreement, commitment or agreement in principle providing for any Takeover Proposal.

Notwithstanding the foregoing, at any time before the Caesars stockholders’ adoption of the Merger Agreement or the ERIstockholders’ approval of the Share Issuance:

 

  

the Caesars Board or the ERI Board, as applicable, may make an Adverse Recommendation Change in connection with aSuperior Proposal if:

 

  

Caesars or ERI, as applicable, is not in material breach of the restrictions described above; and

 

  

after receiving a bona fide unsolicited Takeover Proposal, the Caesars Board or ERI Board, as applicable,determines in good faith, after consultation with outside financial advisors and outside legal counsel, that (i) such Takeover Proposal constitutes a Superior Proposal and (ii) the failure to take such action would be reasonably likely tobe inconsistent with its fiduciary duties under applicable law;



 

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Caesars may terminate the Merger Agreement in order to enter into a binding written agreement with respect to aSuperior Proposal; and

 

  

the Caesars Board or the ERI Board, as applicable, may make an Adverse Recommendation Change in response to aCaesars Intervening Event or an ERI Intervening Event (each as defined in “The Merger Agreement—No Solicitation of Alternative Proposals” beginning on page 205) if the Caesars Board or ERI Board, as applicable,determines in good faith, after consultation with outside financial advisors and outside legal counsel, that the failure to take such action would be reasonably likely to be inconsistent with its fiduciary duties under applicable law.

However, the Caesars Board, the ERI Board or Caesars, as applicable, may only take any of the foregoing actions if:

 

  

Caesars or ERI, as applicable, has given the other party at least four business days’ prior written noticeof its intention to take such action, which notice will:

 

  

in the case of an Adverse Recommendation Change with respect to a Superior Proposal or a termination of theMerger Agreement by Caesars to enter into a Superior Proposal, (a) specify the material terms and conditions of any such Superior Proposal and (b) include a copy of the Superior Proposal and a copy of any written proposed transactiondocuments with the person making such Superior Proposal; or

 

  

in the case of an Adverse Recommendation Change with respect to a Caesars Intervening Event or ERI InterveningEvent, specify the reasons for such Adverse Recommendation Change;

 

  

Each of Caesars and ERI negotiates in good faith, and uses reasonable best efforts to cause its representativesto negotiate, with the other (to the extent requested) during such four business day period to make adjustments to the terms and conditions of the Merger Agreement such that, in the case of a Superior Proposal, it would cause such Superior Proposalto no longer constitute a Superior Proposal or, in the case of a Caesars Intervening Event or ERI Intervening Event, it would not permit the Caesars Board or ERI Board, as applicable, to make an Adverse Recommendation Change pursuant to thestandards described above;

 

  

Following the notice period, the Caesars Board or ERI Board, as applicable, have considered in good faith anyrevisions to the terms of the Merger Agreement proposed by ERI (in the case of the Caesars Board) or Caesars (in the case of the ERI Board) and have determined, after consultation with its outside financial advisors and outside legal counsel, that:

 

  

in the case of an Adverse Recommendation Change with respect to a Superior Proposal or a termination of theMerger Agreement by Caesars to enter into a Superior Proposal, such Superior Proposal continues to constitute a Superior Proposal if revisions proposed by Caesars or ERI, as applicable, were given effect; and

 

  

in the case of a an Adverse Recommendation Change with respect to a Caesars Intervening Event or ERI InterveningEvent, a failure to make such Adverse Recommendation Change would still be inconsistent with the fiduciary duties of the Caesars Board or ERI Board, as applicable, under applicable law.

Conditions to the Obligation to Effect the Merger (page 213)

Each party’s obligation to effect the Merger is subject to the fulfillment (or waiver by all parties) at or prior to the Effective Time ofthe following conditions:

 

  

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no law, statute, rule, regulation, ordinance, code, ruling, subpoena, order, writ, injunction, decree, judgment,ruling, determination, directive, award or settlement issued by any governmental entity (including any gaming authority) shall have been adopted, promulgated or issued that would prohibit, restrain, enjoin or render unlawful the consummation of theMerger or the Share Issuance;

 

  

the registration statement (of which this joint proxy statement/prospectus forms a part) must have been declaredeffective by the SEC under the Securities Act and no stop order suspending the effectiveness of the registration statement must have been issued by the SEC and no proceedings for that purpose will have been threatened or initiated by the SEC thathave not been withdrawn;

 

  

the shares of ERI common stock to be issued pursuant to the Merger will have been approved for listing on NASDAQ,subject to official notice of issuance;

 

  

the waiting period applicable to the Merger under the HSR Act will have expired or been terminated; and

 

  

all required approvals from gaming authorities will have been obtained and such approvals will be in full forceand effect (the “Gaming Approvals Condition”).

Caesars’ obligation to effect the Merger is also subjectto the fulfillment (or waiver by Caesars) at or prior to the Effective Time of the following conditions:

 

  

the accuracy of the representations and warranties of ERI and Merger Sub set forth in the Merger Agreement,subject to the materiality standards set forth in the Merger Agreement, both when made and as of the Closing Date (except to the extent such representations and warranties are expressly made as of a specific date, in which case such representationsand warranties will be true and correct as of such specific date only);

 

  

ERI and Merger Sub will have in all material respects performed all obligations and complied with all covenantsrequired by the Merger Agreement to be performed or complied with by them prior to the Effective Time;

 

  

since the date of the Merger Agreement, there will have been no Material Adverse Effect (as defined in“The Merger Agreement—Representations and Warranties—Definition of Material Adverse Effect” beginning on page 200) with respect to ERI (provided that, for these purposes, “Material Adverse Effect” will notbe deemed to include any events, occurrences, facts, conditions or changes arising out of, relating to or resulting from any steps taken by ERI in connection with its obligations to use reasonable best efforts to obtain antitrust and gamingapprovals); and

 

  

ERI will have delivered to Caesars a certificate, dated as of the Closing Date and signed by ERI’s chiefexecutive officer or chief financial officer, certifying to the effect that the conditions set forth in the first and second bullet points listed above have been satisfied.

Each of ERI’s and Merger Sub’s obligation to effect the Merger is also subject to the fulfillment (or waiver by ERI) at or prior tothe Effective Time of the following conditions:

 

  

the accuracy of the representations and warranties of Caesars set forth in the Merger Agreement, subject to themateriality standards set forth in the Merger Agreement, both when made and as of the Closing Date (except to the extent such representations and warranties are expressly made as of a specific date, in which case such representations and warrantieswill be true and correct as of such specific date only);

 

  

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since the date of the Merger Agreement, there will have been no Material Adverse Effect with respect to Caesars;

 

  

Caesars will have delivered to ERI a certificate, dated as of the Closing Date and signed by Caesars’ chiefexecutive officer or chief financial officer, certifying to the effect that the conditions set forth in the first and second bullet points in this section have been satisfied; and

 

  

one of the following will have occurred: (i) the requisite consents to certain amendments to the indenturegoverning Caesars’ 5.00% convertible senior notes due 2024 will have been obtained from the holders of such notes, and a supplemental indenture effecting such amendments will be in full force and effect; (ii) all of Caesars’ 5.00%convertible senior notes due 2024 will have been converted into shares of Caesars common stock and/or cash or will have otherwise ceased to be outstanding; or (iii) an alternative transaction mutually agreed to by Caesars, ERI and theapplicable Initial Commitment Parties that achieves the effects of the foregoing, will have been effected (the “Convertible Notes Condition”).

Termination of the Merger Agreement (page 215)

The Merger Agreement may be terminated at any time prior to the Effective Time, whether before or after the adoption of the Merger Agreement byCaesars stockholders or the approval of the Share Issuance by ERI stockholders has been obtained (except as otherwise provided below):

 

  

by the mutual written consent of ERI and Caesars;

 

  

by either ERI or Caesars if:

 

  

the Merger has not been consummated on or before the End Date (as defined in “The MergerAgreement—Termination of the Merger Agreement” beginning on page 215); provided that the right to terminate the Merger Agreement pursuant to the foregoing will not be available to a party if the failure of the consummation of theMerger to occur by such date is due to the material breach by such party of any representation, warranty, covenant or other agreement of such party set forth in the Merger Agreement;

 

  

any law, statute, rule, regulation, ordinance, code, ruling, subpoena, order, writ, injunction, decree, judgment,ruling, determination, directive, award or settlement issued by any governmental entity (including any gaming authority) has been adopted, promulgated or issued by any governmental entity (including any gaming authority) that prohibits, permanentlyrestrains, permanently enjoins or renders unlawful the consummation of the Merger or the Share Issuance, and such law, statute, rule, regulation, ordinance, code, ruling, subpoena, order, writ, injunction, decree, judgment, ruling, determination,directive, award or settlement has become final and nonappealable, except that the right to terminate the Merger Agreement pursuant to the foregoing will not be available to a party if such injunction was primarily due to the failure of such partyto perform any of its obligations under the Merger Agreement;

 

  

the ERI Special Meeting (including any adjournments or postponements thereof) has concluded without approval ofthe Share Issuance; or

 

  

the Caesars Special Meeting (including any adjournments or postponements thereof) has concluded without adoptionof the Merger Agreement;

 

  

by Caesars:

 

  

if ERI or Merger Sub has breached or failed to perform any of its representations, warranties, covenants oragreements contained in the Merger Agreement (other than willful and material breaches of certain of its obligations with respect to antitrust laws), which breach or failure to



 

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perform (i) if it occurred or was continuing to occur on the Closing Date, would result in a failure of a condition regarding the accuracy of ERI’s and Merger Sub’s representationsand warranties or ERI’s and Merger Sub’s compliance with their respective covenants and agreements and (ii) by its nature, cannot be cured prior to the End Date or, if such breach or failure is capable of being cured by the End Date,ERI has not cured such breach or failure within 30 days after receiving written notice from Caesars describing such breach or failure in reasonable detail (provided that Caesars is not then in material breach of any representation, warranty,covenant or other agreement contained herein that would result in a failure of a condition regarding the accuracy of Caesars’ representations and warranties or Caesars’ compliance with its covenants and agreements);

 

  

if ERI has been in willful and material breach of certain of its obligations with respect to antitrust laws,which breach, by its nature, cannot be cured or, if such breach is capable of being cured, has not been cured within 30 days after receiving written notice from Caesars describing such breach in detail (provided that Caesars is not then in materialbreach of any representation, warranty, covenant or other agreement contained herein that would result in a failure of a condition regarding the accuracy of Caesars’ representations and warranties or Caesars’ compliance with its covenantsand agreements);

 

  

prior to the approval of the Share Issuance by ERI stockholders, in the event of an Adverse Recommendation Changewith respect to ERI; or

 

  

at any time prior to the adoption of the Merger Agreement by Caesars stockholders, in order to enter into anagreement with respect to a Superior Proposal pursuant to the terms of the Merger Agreement; provided, however, that Caesars may not terminate the Merger Agreement pursuant to the foregoing unless in advance of or concurrently with such terminationCaesars pays, or causes to be paid, an approximately $418.4 million termination fee to ERI;

 

  

by ERI if:

 

  

if Caesars breached or failed to perform any of its representations, warranties, covenants or other agreementscontained in the Merger Agreement, which breach or failure to perform (i) if it occurred or was continuing to occur on the Closing Date, would result in a failure of a condition of ERI to effect the Merger and (ii) by its nature, cannot becured prior to the End Date or, if such breach or failure is capable of being cured by the End Date, Caesars has not cured such breach or failure within 30 days after receiving written notice from ERI describing such breach or failure in reasonabledetail (provided that ERI is not then in material breach of any representation, warranty, covenant or other agreement contained herein that would result in a failure of a condition of Caesars to effect the Merger); or

 

  

prior to the adoption of the Merger Agreement by the Caesars stockholders, in the event of an AdverseRecommendation Change with respect to Caesars.

Termination Fee; Expenses (page 217)

Caesars will pay ERI a $418,407,185 termination fee if:

 

  

the Merger Agreement is terminated by ERI prior to the adoption of the Merger Agreement by Caesars stockholdersin the event of an Adverse Recommendation Change with respect to Caesars;

 

  

the Merger Agreement is terminated by Caesars in order to enter into an agreement with respect to a SuperiorProposal; or

 

  

(i) the Merger Agreement is terminated (A) by ERI or Caesars because the Caesars Special Meeting (includingany adjournments or postponements thereof) has concluded without adoption of the Merger



 

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Agreement by Caesars stockholders or (B) by ERI due to a Caesars Breach Termination Event, (ii) a Takeover Proposal (with all references to 20% in the definition thereof changed to 50%)with respect to Caesars has been publicly announced or has become publicly known and not withdrawn, in the case if clause (i)(A), prior to the Caesars Special Meeting, or in the case of clause (i)(B), prior to such termination, and (iii) within12 months of the termination of the Merger Agreement, Caesars or any of its subsidiaries enters into a definitive agreement with a third-party with respect to, or consummates a transaction that is a, Takeover Proposal.

ERI will pay Caesars a $154,945,692 termination fee if:

 

  

the Merger Agreement is terminated by Caesars prior to the approval of the Share Issuance by ERI stockholders inthe event of an Adverse Recommendation Change with respect to ERI; or

 

  

(i) the Merger Agreement is terminated (A) by ERI or Caesars because the ERI Special Meeting (including anyadjournments or postponements thereof) has concluded without approval of the Share Issuance by ERI’s stockholders or (B) by Caesars due to an ERI Breach Termination Event, (ii) a Takeover Proposal (with all references to 20% in thedefinition thereof changed to 50%) with respect to ERI has been publicly announced or has become publicly known and not withdrawn, in the case of clause (i)(A), prior to the ERI Special Meeting, or in the case of clause (i)(B), prior to suchtermination, and (iii) within 12 months after the termination of the Merger Agreement, ERI or any of its subsidiaries enters into a definitive agreement with a third party with respect to, or consummates a transaction that is, a TakeoverProposal.

ERI will pay Caesars an $836,814,370 termination fee if the Merger Agreement is terminated:

 

  

by ERI or Caesars in the event of a Final Order Termination Event in connection with a law, statute, rule,regulation, ordinance, code, ruling, subpoena, order, writ, injunction, decree, judgment, ruling, determination, directive, award or settlement relating to antitrust laws or gaming laws;

 

  

by ERI or Caesars in the event of an End Date Termination Event if, at the time of such termination, one or moreof the conditions relating to antitrust or gaming laws or approvals have not been satisfied but all other conditions to ERI’s obligations to effect the Merger have been, or are capable of being, satisfied at or prior to the consummation of theMerger; or

 

  

by Caesars in the event of an ERI Antitrust Breach Termination Event.

In addition, (i) in the event of a termination resulting from the failure to adopt the Merger Agreement by Caesars stockholders, Caesarsshall pay ERI up to $50.0 million in respect of ERI’s reasonable and documented out-of-pocket costs and expenses in connection with the Merger Agreement and(ii) in the event of a termination resulting from the failure to obtain approval of the Share Issuance by ERI stockholders, ERI shall pay Caesars up to $50.0 million in respect of Caesars’ reasonable and documented out-of-pocket costs and expenses in connection with the Merger Agreement, in each case within two business days after such termination.

Bank Commitment Letter and Related Financing (page 222)

In connection with the execution of the Merger Agreement, on June 24, 2019, ERI entered into a debt financing commitment letter (the“Commitment Letter”) and related fee letters with JPMorgan Chase Bank, N.A., Credit Suisse AG, Cayman Islands Branch, Credit Suisse Loan Funding LLC, Macquarie Capital (USA) Inc. and Macquarie Capital Funding LLC (the “InitialCommitment Parties”). On July 19, 2019, ERI entered into an amended and restated commitment letter (the “A&R Commitment Letter”) and related fee letters, which amended and restated the Commitment Letter in its entirety to,among other things, add additional arrangers and lenders, including Bank of America, N.A., BofA Securities, Inc., Deutsche Bank Securities Inc., Deutsche Bank



 

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AG New York Branch, Deutsche Bank AG Cayman Islands Branch, Goldman Sachs Bank USA, SunTrust Bank, SunTrust Robinson Humphrey, Inc., U.S. Bank National Association, KeyBank National Association,KeyBanc Capital Markets Inc., Fifth Third Bank, and Citizens Bank, National Association (together with the Initial Commitment Parties, collectively, the “Commitment Parties”). Pursuant to the A&R Commitment Letter, the CommitmentParties committed to arrange and provide (i) ERI with: (w) a $1,000.0 million senior secured revolving credit facility, (x) a $3,000.0 million senior secured term loan B facility, (y) a $3,600.0 million seniorsecured 364-day bridge facility and (z) a $1,800.0 million senior unsecured bridge loan facility and (ii) a subsidiary of Caesars with a $2,400.0 million senior secured incremental termloan B facility (collectively, the “Debt Financing”). The proceeds of the Debt Financing may be used (a) to pay all or a portion of the cash portion of the Merger Consideration, (b) to refinance all of ERI’s existingsyndicated bank credit facilities and outstanding senior notes, (c) to refinance certain of Caesars’ and its subsidiaries’ existing debt, (d) to pay transaction fees and expenses related to the foregoing and/or (e) forworking capital and general corporate purposes. The availability of the borrowings under the Debt Financing is subject to the satisfaction of certain customary conditions, including the substantially concurrent consummation of the Merger. Inaddition, pursuant to the A&R Commitment Letter and the related fee letters, if the Debt Financing does not close prior to January 31, 2020, then subject to certain conditions set forth in the A&R Commitment Letter and the related feeletters, the Commitment Parties have the right to require ERI (or an unrestricted subsidiary of ERI) to issue all or a portion of the Debt Financing (other than the commitments for ERI’s new revolving credit facility or 364-day secured bridge facility) into escrow pending consummation of the Merger and satisfaction of the other closing conditions, or in certain circumstances, to allocate a portion of the Debt Financing to lenders.Additionally, ERI entered into an engagement letter with the Commitment Parties (or their applicable affiliates) pursuant to which the Commitment Parties or their affiliates have been engaged to serve as joint bookrunning managing underwriters of,joint bookrunning managing placement agents for, or joint bookrunning managing initial purchasers in a bond offering by ERI that may be issued in lieu of all or part of the senior unsecured bridge loan facility of ERI referred to above.

On July 19, 2019, ERI entered into a commitment and engagement letter (as amended, the “Increase Commitment Letter”) andrelated fee letters to, if elected by ERI, increase the total size of the Debt Financing, including an increase to the senior secured term loan B facility to be arranged on a commercially reasonable efforts basis by the Commitment Parties in anamount to be agreed upon by the parties and an increase to the revolving credit facility by $830.0 million, the proceeds of which, if ERI elects to incur such financing, may be used to refinance certain existing indebtedness of CRC and itssubsidiaries and for working capital and general corporate purposes upon consummation of the Merger. The Increase Commitment Letter and a related engagement letter also contemplate the possibility of new senior secured and/or senior unsecured notesto be issued by ERI.

The Voting Agreements (pages 223 and 225)

Concurrently with the execution of the Merger Agreement, Recreational Enterprises, Inc. (“REI”), a significant ERI stockholder, andCaesars entered into the REI Voting Agreement, pursuant to which REI agreed to vote all shares of ERI common stock owned by REI FOR each of the Share Issuance, the Delaware Conversion and the ERI A&R Nevada Charter, subject to the termsand conditions of the REI Voting Agreement. At the close of business on October 4, 2019, the record date for the ERI Special Meeting, REI beneficially owned 11,129,867 shares of ERI common stock or approximately 14.35% of the shares of ERI commonstock outstanding on that date. REI has also agreed to certain restrictions on the sale of its shares of ERI common stock prior to the Merger.

Concurrently with the execution of the Merger Agreement, certain stockholders of Caesars common stock affiliated with Carl C. Icahn(collectively, the “Caesars Significant Stockholder”) and ERI entered into the Caesars Significant Stockholder Voting Agreement, pursuant to which the Caesars Significant Stockholder



 

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agreed to vote all shares of Caesars common stock owned by the Caesars Significant Stockholder for the adoption of the Merger Agreement and the approval of the Merger, subject to the terms andconditions of the voting agreement. At the close of business on October 4, 2019, the record date for the Caesars Special Meeting, the Caesars Significant Stockholder beneficially owned 114,250,942 shares of Caesars common stock orapproximately 16.83% of the shares of Caesars common stock outstanding and entitled to vote on that date. The Caesars Significant Stockholder has also agreed to certain restrictions on the sale of its shares of Caesars common stock prior to theMerger.

The Master Transaction Agreement and Real Estate Purchase Agreements (pages 219 and 221)

In connection with the execution of the Merger Agreement, on June 24, 2019, ERI entered into a Master Transaction Agreement (the“Master Transaction Agreement”) with VICI Properties L.P., a Delaware limited partnership (“VICI”), pursuant to which, among other things, ERI has agreed, subject to the consummation of the Merger and other applicable conditions,to:

 

  

consummate one or more sale and leaseback transactions with VICI and/or its affiliates with respect to the realestate components of the following gaming facilities or, under certain circumstances, replacement gaming facilities in lieu of the following gaming facilities:

 

  

Harrah’s New Orleans in New Orleans, Louisiana (“Harrah’s New Orleans”), at a purchase priceof $775.5 million;

 

  

Harrah’s Laughlin Hotel & Casino in Laughlin, Nevada (“Harrah’s Laughlin”), at apurchase price of $434.75 million; and

 

  

Harrah’s Resort Atlantic City and Harrah’s Atlantic City Waterfront Conference Center in Atlantic City,New Jersey (collectively, “Harrah’s Atlantic City”), at a purchase price of $599.25 million

(thesale and leaseback of the properties listed above, collectively, the “Sale and Leaseback Transactions”);

 

  

amend the lease, dated as of October 6, 2017, by and between CPLV Property Owner LLC, an affiliate of VICI,as landlord, and Desert Palace LLC (“Desert Palace”) and CEOC LLC, affiliates of Caesars Entertainment Corporation (“CEC”), collectively as tenant (as amended, the “CPLV Lease”), for consideration of approximately$1,404 million to, among other things, (a) add the gaming facility known as Harrah’s Las Vegas (which is currently leased by an affiliate of VICI to an affiliate of CEC) as a leased property thereunder and increase the annual rentpayable to VICI with respect to such gaming facility by $15 million for the remainder of the lease term, (b) increase the annual rent with respect to the gaming facility known as Caesars Palace Las Vegas thereunder by approximately$84 million for the remainder of the lease term, (c) adjust the capital expenditure requirements thereunder, (d) remove the rent coverage tests which act to cap base rent escalations under the CPLV Lease and (e) extend the termof the CPLV Lease so that following the amendment of the CPLV Lease there will be 15 years remaining until the expiration of the initial term;

 

  

amend the lease, dated as of October 6, 2017, by and between certain affiliates of VICI, as landlord, andCEOC LLC and certain of its affiliates, collectively as tenant (as amended, the “Non-CPLV Lease”), to, among other things, (a) add the properties being sold and leased back pursuant to the Saleand Leaseback Transactions as leased properties thereunder, (b) increase the annual rent thereunder by $154 million for the remainder of the lease term in the aggregate (assuming properties with specified property-level EBITDAR areacquired by VICI under the Sale and Leaseback Transactions), (c) adjust the capital expenditure requirements thereunder, (d) remove the rent coverage tests which act to cap base rent escalations under theNon-CPLV Lease and (e) extend the term of the Non-CPLV Lease so that following the amendment of the Non-CPLV Lease therewill be 15 years remaining until the expiration of the initial term;

 

  

amend the lease, dated as of October 6, 2017, by and between Harrah’s Joliet Landco LLC, as landlord,and Des Plaines Development Limited Partnership, as tenant (as amended, the “Joliet Lease”) to,



 

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among other things, (a) remove the rent coverage tests which act to cap base rent escalations under the Joliet Lease and (b) extend the term of the Joliet Lease so that following theamendment of the Joliet Lease there will be 15 years remaining until the expiration of the initial term;

 

  

provide a guaranty in respect of each of the CPLV Lease, the Non-CPLVLease and the Joliet Lease, under which ERI, as guarantor, will guarantee, among other things, the payment of all monetary obligations and performance of covenants, agreements and requirements of the tenants thereunder (with the guaranty for theJoliet Lease being limited to only a portion of the foregoing);

 

  

enter into (and/or cause its applicable subsidiaries (after giving effect to the Merger) to enter into) (a)certain right of first refusal agreements with VICI that, subject to various conditions, require ERI to provide VICI with the opportunity to (i) purchase or purchase and lease back to ERI the casino resort known as the Horseshoe BaltimoreMaryland Casino and (ii) purchase or purchase and lease back to ERI up to two of the casino resorts known as the Flamingo Las Vegas, Paris Las Vegas, Planet Hollywood Resort & Casino, Bally’s Las Vegas and The LINQ Hotel & Casino,prior to ERI or its applicable affiliate selling or selling and leasing back its interests in such properties to another party and (b) a put-call right agreement, by and between VICI or an affiliatethereof and CRC, under which CRC may require VICI or its affiliate to purchase and lease back (as lessor) to ERI or its affiliates the real estate components of the gaming facilities known as “Hoosier Park” and “Indiana Grand,”and VICI or its affiliate may require CRC to sell to VICI or its affiliates and lease back (as lessee) the real estate components of those gaming facilities; and

 

  

undertake certain related transactions in connection with or related to the foregoing.

On September 26, 2019, ERI and VICI entered into separate definitive Purchase and Sale Agreements (collectively, the “Real EstatePurchase Agreements”) to effect the purchase and sale of Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City in connection with the transactions described in the first bullet point above.

Various of the transactions contemplated by the Master Transaction Agreement are subject to conditions precedent applicable solely to suchtransactions, and it is possible that one or more such transactions may not close concurrently with the other transactions, or at all.

U.S. Federal Income Tax Considerations (page 227)

For U.S. holders (as such term is defined below under “U.S.Federal Income Tax Considerations”) of Caesars common stock, the receipt of the Merger Consideration in exchange for shares of Caesars common stock pursuant to the Merger generally will be a taxable transaction for U.S. federal income taxpurposes. In general, for U.S. federal income tax purposes, a U.S. holder who receives the Merger Consideration in exchange for shares of Caesars common stock pursuant to the Merger will recognize gain or loss in an amount equal to the difference,if any, between (i) the fair market value of any ERI common stock received as of the date of the Merger plus the amount of any cash consideration received and (ii) the U.S. holder’s adjusted tax basis in its shares of Caesars commonstock. However, in certain circumstances, a holder of Caesars common stock could be treated as receiving a dividend in an amount up to the amount of cash consideration received by such holder in the Merger. As a result of the possibility of suchdeemed dividend treatment, a non-U.S. holder (as such term is defined below under “U.S. Federal Income Tax Considerations”) of Caesars common stock may be subject to U.S. withholding tax at arate of 30% (or such lower rate as may be specified by an applicable income tax treaty) with respect to the cash consideration received in the Merger.

For a more detailed discussion of the U.S. federal income tax considerations generally applicable to the Merger and, with respect to non-U.S. holders of Caesars common stock, the ownership and disposition of ERI common stock received in the Merger, see “U.S. Federal Income Tax Considerations” beginning on page 227.



 

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The tax consequences of the Merger and the ownership and disposition of ERI common stock forany particular Caesars stockholder will depend on that stockholder’s particular facts and circumstances. Accordingly, Caesars stockholders are urged to consult their tax advisors to determine the U.S. federal income tax consequences of theMerger and the ownership and disposition of ERI common stock to them, including estate, gift, state, local or non-U.S. tax consequences of the Merger and the ownership and disposition of ERI common stock.

ERI believes that the reincorporation of ERI from Nevada to Delaware will constitute a reorganization within the meaning ofSection 368(a)(1)(F) of the Code, which involves a reorganization that is a mere change in identity, form or place of organization for a corporation. Assuming that the Delaware Conversion will be treated for U.S. federal income tax purposes asa reorganization within the meaning of Section 368(a)(1)(F) of the Code, holders of ERI common stock (including Caesars stockholders that receive ERI common stock in the Merger) will not recognize any gain or loss as a result of theconsummation of the Delaware Conversion. For a more detailed discussion of the U.S. federal income tax considerations generally applicable to the Delaware Conversion, see “U.S. Federal Income Tax Considerations—Tax Consequences of theDelaware Conversion” beginning on page 233.

Comparison of Stockholders’ Rights (page 235)

ERI is currently a Nevada corporation subject to the provisions of the NRS, and Caesars is a Delaware corporation subject to theprovisions of the DGCL. If the Merger is consummated and ERI stockholders approve the Delaware Conversion, Caesars stockholders, whose rights are currently governed by Caesars’ existing certificate of incorporation and bylaws and the DGCL,will, if they receive ERI common stock as Merger Consideration, become stockholders of ERI and their rights will be governed by the Delaware Charter and the Delaware Bylaws attached as Annexes D and E that would become effective upon consummation ofthe Merger and the DGCL. If the Merger is consummated and ERI stockholders do not approve the Delaware Conversion, ERI will remain a Nevada corporation, and Caesars stockholders that receive ERI common stock as Merger Consideration will becomestockholders of ERI and their rights will be governed by ERI’s current amended and restated articles of incorporation (unless the ERI A&R Nevada Charter is approved, in which case the ERI A&R Nevada Charter will apply), the ERI A&RNevada Bylaws and the NRS.

Appraisal Rights in Connection with the Merger (page 258)

Pursuant to Section 262 of the DGCL, Caesars stockholders who do not vote in favor of adoption of the Merger Agreement and approval of theMerger, who continuously hold their shares of Caesars common stock through the Effective Time and who otherwise comply precisely with the applicable requirements of Section 262 of the DGCL have the right to seek appraisal of the fair value oftheir shares of Caesars common stock, as determined by the Delaware Court of Chancery, if the Merger is consummated. The “fair value” of shares of Caesars common stock as determined by the Delaware Court of Chancery could be greater than,the same as, or less than the value of the Merger Consideration that a Caesars stockholder would otherwise be entitled to receive under the terms of the Merger Agreement.

Caesars stockholders who wish to exercise the right to seek an appraisal of their shares must so advise Caesars by submitting a written demandfor appraisal in the form described in this joint proxy statement/prospectus prior to the vote to adopt the Merger Agreement and approve the Merger, and must otherwise follow the procedures prescribed by Section 262 of the DGCL. A person havinga beneficial interest in shares of Caesars common stock held of record in the name of another person, such as a bank, broker or other nominee or intermediary, must act promptly to cause the record holder to follow the steps summarized in this jointproxy statement/prospectus and in a timely manner to perfect appraisal rights. In view of the complexity of Section 262 of the DGCL, Caesars stockholders who may wish to pursue appraisal rights should consult their own legal and financialadvisors. See “Appraisal Rights of Caesars Stockholders” beginning on page 258.



 

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ERI stockholders do not have any dissenter’s rights under the NRS in connection withthe ERI Special Meeting or the Share Issuance.

Litigation Relating to the Merger (page 190)

As of October 3, 2019, seven complaints have been filed challenging the Merger. Six of the complaints generally assert claims underSections 14(a) and 20(a) of the Exchange Act challenging the adequacy of certain disclosures made in the version of this joint proxy statement/prospectus filed with the SEC on September 3, 2019. Those complaints seek, among other relief,an injunction preventing consummation of the Merger, damages in the event that the Merger is consummated and attorneys’ fees. The seventh complaint, filed in Nevada state court, asserts claims for breach of fiduciary duty by, among otherthings, approving the Merger at an unfair price and disseminating materially misleading information in connection with the Merger. For a more detailed description of litigation in connection with the Merger, see “The Merger—LitigationRelating to the Merger” beginning on page 190. ERI and Caesars believe the claims asserted in the complaints are without merit.



 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus, and the documents to which this joint proxy statement/prospectus refers, containforward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Any statements contained in this joint proxy statement/prospectus or any such documentsmade by or attributable to ERI or Caesars that are not statements of historical fact, including statements about ERI’s or Caesars’ beliefs and expectations regarding the Merger and related transactions, timing of consummation of the Mergerand future results, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and should be evaluated accordingly. Words such as “estimate,” “believe,” “anticipate,”“expect,” “intend,” “target,” “should,” “may,” “will,” “plan,” “goal,” “seek,” “strategy,” “future,” “likely” and similarexpressions and their negative forms are intended to identify forward-looking statements. These statements are made on the basis of management’s views and assumptions regarding future events.

Forward-looking statements are based upon certain underlying assumptions, including any assumptions mentioned with the specific statements, asof the date such statements were made. Such assumptions are in turn based upon internal estimates and analyses of market conditions and trends, management plans and strategies, economic conditions and other factors. Such forward-looking statementsare only predictions and involve known and unknown risks and uncertainties, many of which are beyond the control of ERI and Caesars. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and dependupon future circumstances that may not occur. Actual results may differ materially from any future results, performance or achievements expressed or implied by such statements. These risks and uncertainties include those set forth under“Risk Factors” beginning on page 48, and those set forth under “Forward-Looking Statements,” “Risk Factors” or any similar heading in the documents incorporated by reference into this joint proxystatement/prospectus. Some of the contingencies and uncertainties to which any forward-looking statement contained herein are subject include, but are not limited to, the following:

 

  

risks related to the combination of ERI and Caesars and the integration of their respective businesses andassets;

 

  

the possibility that the Merger and the real estate transactions with VICI are not consummated when expected orat all because required regulatory, stockholder or other approvals are not received or other conditions to the consummation thereof are not satisfied on a timely basis or at all;

 

  

the risk that the financing required to fund the Merger and related transactions is not obtained on the termsanticipated or at all;

 

  

potential adverse reactions or changes to business or employee relationships, including those resulting from theannouncement or consummation of the Merger;

 

  

potential litigation challenging the Merger;

 

  

the possibility that the anticipated benefits of the Merger, including cost savings and expected synergies, arenot realized when expected or at all, including as a result of the impact of, or issues arising from, the integration of ERI and Caesars;

 

  

conditions imposed on ERI and Caesars in order to obtain required regulatory approvals;

 

  

uncertainties in the global economy and credit markets and its potential impact on ERI’s ability to financethe Merger and related transactions;

 

  

the possibility that the Merger and related transactions may be more expensive to complete than anticipated,including as a result of unexpected factors or events or the payment of termination fees or expense reimbursement;

 

  

diversion of management’s attention from ongoing business operations and opportunities;

 

  

the ability to retain certain key employees of ERI or Caesars;

 

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risks associated with increased leverage from the Merger and related transactions;

 

  

changes in the value of ERI common stock (and thus, the Merger Consideration) prior to the consummation of theMerger;

 

  

uncertainty regarding the expected financial performance of the combined company following the consummation ofthe Merger, which may differ significantly from the pro forma financial statements contained in this joint proxy statement/prospectus;

 

  

competitive responses to the Merger;

 

  

legislative, regulatory and economic developments; and

 

  

uncertainties as to the timing of the consummation of the Merger and the ability of ERI and Caesars to consummatethe Merger.

Many of these risks are beyond management’s ability to control or predict. Should one or more of theserisks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated. Investors are cautioned not to place undue reliance on such forward-looking statements asthey speak only as of the date the statement is made. All forward-looking statements attributable to ERI or Caesars, or persons acting on behalf of either ERI or Caesars, are expressly qualified in their entirety by the cautionary statements andrisk factors contained in this joint proxy statement/prospectus and ERI’s and Caesars’ respective filings with the SEC. Forward-looking statements speak only as of the date they are made and are based only on information currentlyavailable to ERI or Caesars, as applicable.

Except as required under the federal securities laws or the rules and regulations of the SEC,neither ERI nor Caesars undertakes any obligation to update or review any forward-looking statement or information, whether as a result of new information, future events or otherwise.

 

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RISK FACTORS

In addition to the other information included in and incorporated by reference into this joint proxy statement/prospectus, Caesarsstockholders should consider carefully the matters described below in determining whether to adopt the Merger Agreement and approve the Merger. ERI stockholders should consider carefully the matters described below in determining whether to approvethe Share Issuance, the Delaware Conversion and the ERI A&R Nevada Charter. Please also refer to the information under the heading “Risk Factors” set forth in Part I, Item 1A in each of ERI’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and Caesars’ Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and in Part II,Item 1A of ERI’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 and Caesars’ Quarterly Report on Form 10-Q for the quarter endedJune 30, 2019, which are incorporated by reference into this joint proxy statement/prospectus, and to the information under the heading “Risk Factors” in other reports filed after the date of this joint proxystatement/prospectus and which will be incorporated by reference herein. Please also refer to “Where You Can Find More Information” beginning on page 270.

Risks Relating to the Merger

Caesars stockholders cannot be sure of the amount or value of the Merger Consideration they will receive.

If the Merger is consummated, each share of Caesars common stock will be converted into the right to receive, at the election of thestockholder, (a) the Cash Election Consideration or (b) the Stock Election Consideration, subject to proration procedures set forth in the Merger Agreement such that the aggregate amount of cash paid by ERI as Merger Consideration will notexceed an amount equal to the product of (i) $8.40 (plus, if the applicable closing conditions set forth in the Merger Agreement are not satisfied by March 25, 2020, $0.003333 for each day (provided that such amount will not be payable ifthe waiting period under the HSR Act has expired or been terminated but (to the extent required) the consents of the holders of Caesars’ 5.00% convertible senior notes due 2024 have not been obtained) from March 25, 2020 until the ClosingDate) and (ii) the number of outstanding shares of Caesars common stock, and the aggregate amount of ERI common stock paid by ERI as Merger Consideration will not exceed the product of (x) 0.0899 and (y) the number of outstandingshares of Caesars common stock.

The amount and value of the Merger Consideration Caesars stockholders will receive upon consummation ofthe Merger will fluctuate based on the price of ERI common stock, regardless of whether Caesars stockholders elect to receive the Cash Election Consideration, the Stock Election Consideration or a mix of both. The Merger Consideration will bedetermined based on the ERI Common Stock VWAP. The price of ERI common stock on the Closing Date and the ERI Common Stock VWAP may vary from the price of ERI common stock on the date that ERI and Caesars announced the Merger, on the date of thisjoint proxy statement/prospectus, on the date of the Caesars Special Meeting and at the time Caesars stockholders elect a form of Merger Consideration. Stock price changes may result from a variety of factors beyond ERI’s and Caesars’control, including general market and economic conditions, changes in ERI’s and Caesars’ respective businesses, operations and prospects, and regulatory considerations, among other things. As a result, at the time of the Caesars SpecialMeeting and when Caesars stockholders make their election to receive the Cash Election Consideration or the Stock Election Consideration, they will not know or be able to calculate the amount of the Cash Election Consideration or the Stock ElectionConsideration or the value of ERI common stock they will receive upon consummation of the Merger. A decrease in the price of ERI common stock would result in a reduction in the amount of cash and the value of ERI common stock to be received byCaesars stockholders upon consummation of the Merger.

It is possible that the Merger may not be consummated for a significant period oftime after the Caesars Special Meeting has occurred. As a result, the price of ERI common stock could vary significantly through the Closing Date, and Caesars stockholders are urged to obtain up-to-date prices for ERI common stock. See “Comparative Per Share Market Price, Dividend and Other Data” beginning on page 102 for ranges of historic prices of ERI common stock.

 

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In addition, the value of ERI common stock to be received by Caesars stockholders willdepend on the price of ERI common stock at the time Caesars stockholders receive their shares of ERI common stock following the consummation of the Merger. Such price will likely differ from the ERI Common Stock VWAP, which is used to determine theamount of the Cash Election Consideration and the Stock Election Consideration.

Caesars stockholders may receive a form of Merger Considerationdifferent from what they elect.

Regardless of whether Caesars stockholders make a Cash Election or a Stock Election, the totalamounts of cash and ERI common stock representing the Merger Consideration available for Caesars stockholders are fixed amounts, and the Merger Agreement contains proration procedures that are designed to ensure that such amounts are not exceeded.If a particular form of Merger Consideration is oversubscribed, then an election for that form of Merger Consideration will be prorated and reallocated, such that all or a portion of a Caesars stockholder’s Merger Consideration may be in a formthat such stockholder did not choose. Please refer to “The Merger—Electing the Form of Merger Consideration” beginning on page 175.

The Merger Agreement subjects ERI and Caesars to restrictions on their respective business activities during the pendency of the Merger.

The Merger Agreement subjects ERI and Caesars to restrictions on their respective business activities and obligates ERI and Caesars togenerally operate their businesses in the ordinary course in all material respects during the pendency of the Merger absent the prior written consent of the other party. These restrictions could prevent ERI and Caesars from pursuing attractivebusiness opportunities or responding effectively to competitive pressures and industry developments that arise prior to the consummation of the Merger or termination of the Merger Agreement and are outside the ordinary course of business. Inparticular, the Merger Agreement restricts each party from making certain acquisitions and dispositions and taking other specified actions absent the prior written consent of the other party. If ERI or Caesars is unable to take actions it believesare beneficial, such restrictions could have an adverse effect on ERI’s or Caesars’, as applicable, business, financial condition and results of operations. Please refer to “The Merger Agreement—Conduct of Business Pending theMerger” beginning on page 201.

Delay or failure to consummate the Merger would prevent ERI and Caesars from realizing the anticipatedbenefits of the Merger and each party would also remain liable for significant transaction costs.

Any delay in consummating theMerger may increase the cash portion of the Merger Consideration and adversely impact the combined company’s ability to realize synergies and other benefits that are anticipated if the Merger is consummated within the expected timeframe. Inparticular, if the applicable closing conditions set forth in the Merger Agreement are not satisfied by March 25, 2020, the amount of cash payable by ERI as Merger Consideration per share of Caesars common stock will increase by $0.003333 foreach day (provided that such amount will not be payable if the waiting period under the HSR Act has expired or been terminated but (to the extent required) the consents of the holders of Caesars’ 5.00% convertible senior notes due 2024 have notbeen obtained) from March 25, 2020 until the Closing Date. In addition, the market prices of Caesars common stock and ERI common stock may reflect various market assumptions as to whether and when the Merger will be consummated. Consequently,the failure to consummate, or any delay in the consummation of, the Merger could result in significant changes in the market prices of each party’s common stock. In addition, ERI and Caesars have incurred and will continue to incur significantcosts relating to the Merger, such as debt commitment, legal, accounting, financial advisor and printing fees, and, to the extent that the Debt Financing is incurred prior to consummation of the Merger, interest expense, in each case, that mayincrease in the event that the consummation of the Merger is delayed and will be payable in the event that the Merger is not consummated. For example, pursuant to the A&R Commitment Letter and the related fee letters, if the Debt Financing doesnot close prior to January 31, 2020, then subject to certain conditions set forth in the A&R Commitment Letter and the related fee letters, the Commitment Parties have the right to require ERI (or an unrestricted subsidiary of ERI) to issueall or a portion of the Debt Financing (other than the commitments for ERI’s new revolving credit

 

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facility or 364-day secured bridge facility) into escrow pending consummation of the Merger and satisfaction of the other closing conditions, or in certaincircumstances, to allocate a portion of the Debt Financing to lenders, which would result in ERI incurring additional interest expense prior to consummation of the Merger. Moreover, either ERI or Caesars may be required to pay a termination feedepending on the circumstances surrounding a termination of the Merger Agreement, as described in “The Merger Agreement—Termination Fee; Expenses” beginning on page 217. Further, in the event the Master Transaction Agreement isterminated because the Merger Agreement is terminated, ERI is required to pay VICI a fee of $75.0 million pursuant to the terms of the Master Transaction Agreement.

Whether or not the Merger is consummated, the pendency of the Merger could cause disruptions in the businesses of ERI and Caesars, which could have anadverse effect on their businesses, financial condition and results of operations.

The pendency of the Merger could causedisruptions in the businesses of ERI and Caesars, including the following:

 

  

current and prospective employees of ERI or Caesars may experience uncertainty about their future roles with thecombined company following the Merger or consider other employment alternatives, which might adversely affect ERI’s and Caesars’ ability to retain or attract their respective key managers and other employees, and current employees of ERIor Caesars may lose productivity as a result of such uncertainty;

 

  

current and prospective customers of ERI or Caesars may anticipate changes in how they are served or the benefitsoffered by ERI or Caesars loyalty reward programs and may, as a result, choose to discontinue their patronage of either party;

 

  

current and prospective suppliers or other business relations of ERI or Caesars may delay or defer certainbusiness decisions or may seek to terminate, change or renegotiate their relationship or key commercial agreements with ERI or Caesars, or not to establish a relationship with ERI or Caesars, as a result of the Merger; and

 

  

the attention of management and key employees of each of ERI and Caesars may be diverted from the operation ofERI’s and Caesars’ respective businesses toward the consummation of the Merger.

If any of these disruptions were to occur, itcould have an adverse effect on ERI’s and Caesars’ respective businesses, financial condition and results of operation.

Obtainingrequired approvals and satisfying closing conditions may delay or prevent consummation of the Merger.

Consummation of the Mergeris subject to various closing conditions, including, among others, (a) expiration or termination of any applicable waiting period under the HSR Act and receipt of required gaming approvals, (b) the absence of any governmental order or lawprohibiting the consummation of the Merger, (c) adoption of the Merger Agreement by holders of a majority of the outstanding shares of Caesars common stock entitled to vote, (d) the approval by ERI stockholders of the Share Issuance,(e) the effectiveness of the registration statement for the shares of ERI common stock to be issued in the Merger (of which this joint proxy statement/prospectus forms a part) and the authorization for listing of those shares on NASDAQ,(f) absence of a material adverse effect on the other party, (g) the accuracy of the other party’s representations and warranties, subject to customary materiality standards, (h) compliance of the other party with its respectivecovenants under the Merger Agreement in all material respects and (i) conversion or certain amendments of, or another mutually agreed arrangement with respect to, Caesars’ 5.00% convertible senior notes due 2024.

If such conditions are not satisfied, the Merger will not be consummated unless such conditions are validly waived. Such conditions mayjeopardize or delay consummation of the Merger or may reduce the anticipated

 

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benefits of the Merger. Further, no assurance can be given that the required approvals will be obtained or that the conditions to closing will be satisfied. Even if all such approvals areobtained, no assurance can be given as to the terms, conditions and timing of such approvals or that they will satisfy the terms of the Merger Agreement. Please refer to “The Merger Agreement—Conditions to the Obligation to Effect theMerger” beginning on page 213 for a discussion of the conditions to the consummation of the Merger and to “The Merger Agreement—Efforts to Consummate the Merger” beginning on page 209 for a discussion of theparties’ obligations to use their respective reasonable best efforts to obtain certain consents and approvals. If the Merger is not consummated by June 24, 2020 (as may be extended to a date no later than December 24, 2020 uponsatisfaction of certain conditions to extension set forth in the Merger Agreement and described in this joint proxy statement/prospectus), either ERI or Caesars may terminate the Merger Agreement. Please refer to “The MergerAgreement—Termination of the Merger Agreement” beginning on page 215.

The Merger is subject to the receipt of governmental approvalsthat may impose conditions that could have an adverse effect on ERI or Caesars or, if not obtained, could prevent consummation of the Merger or, in some circumstances, require ERI to pay Caesars a termination fee of approximately$836.8 million.

Consummation of the Merger is conditioned upon the receipt of certain governmental approvals, including,without limitation, antitrust and gaming regulatory approvals. Although each party has agreed to use their respective reasonable best efforts to obtain the requisite governmental approvals, there can be no assurance that these approvals will beobtained and that the other conditions to consummating the Merger will be satisfied. In addition, the governmental authorities from which the regulatory approvals are required may impose conditions on the consummation of the Merger or requirechanges to the terms of the Merger Agreement or other agreements to be entered into in connection with the Merger Agreement. Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying or impedingconsummation of the Merger or of imposing additional costs or limitations on ERI or Caesars following consummation of the Merger, any of which might have an adverse effect on ERI’s or Caesars’, as applicable, business, financial conditionand results of operations. In addition, if the Merger Agreement is terminated (a) due to a law or order relating to gaming or antitrust laws that prohibits or permanently enjoins the consummation of the Merger, (b) because the requiredregulatory approvals were not obtained prior to June 24, 2020 (as may be extended to a date no later than December 24, 2020 upon satisfaction of certain conditions to extension set forth in the Merger Agreement and described in this jointproxy statement/prospectus) or (c) due to ERI willfully and materially breaching certain obligations with respect to the actions required to be taken by ERI to obtain required antitrust approvals, ERI will be required to pay Caesars atermination fee of approximately $836.8 million.

Moreover, the Caesars Special Meeting and the ERI Special Meeting may take placebefore all governmental approvals have been obtained and, in cases where such approvals have not been obtained, before the terms of any conditions to obtain such approvals that may be imposed are known. As a result, if the requisite stockholderapprovals are obtained at such meetings, ERI and Caesars may make decisions after the special meetings to waive a condition or approve certain actions required to obtain necessary approvals without seeking further stockholder approval. Such actionscould have an adverse effect on the combined company’s business, financial condition and results of operations following the Merger.

Antitrustapprovals that are required to consummate the Merger may not be received, may take longer than expected or may impose conditions, including the requirement to divest assets, that could have an adverse effect on the combined company following theMerger.

Under the provisions of the HSR Act, the Merger may not be consummated until filings are made with the Antitrust Divisionof the DOJ and the FTC and the expiration of a 30-calendar day waiting period, or the early termination of that waiting period, following the parties’ filings. ERI and Caesars filed their respectivenotification and report forms under the HSR Act on July 16, 2019. On August 15, 2019, ERI withdrew its notification and report form and re-filed the same on August 19, 2019, which began a new 30-day waiting period. On September 18, 2019, each of ERI and Caesars received a Request for Additional Information and

 

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Documentary Material (a “Second Request”) from the FTC in connection with the FTC’s review of the Merger, which extends the waiting period until 30 days after both parties havesubstantially complied with the Second Request, unless the FTC early terminates the additional waiting period or the parties otherwise agree not to consummate the Merger for a period of time after substantial compliance. ERI and Caesars are workingwith the FTC to complete its investigation as soon as practicable.

In addition, private parties who may be adversely affected by theMerger and individual states may bring legal actions under the antitrust laws in certain circumstances. Although ERI and Caesars believe the consummation of the Merger will not likely be prevented by antitrust laws, there can be no assurance that achallenge to the Merger on antitrust grounds will not be made or, if a challenge is made, what the result will be. Under the Merger Agreement, ERI and Caesars have agreed to use their reasonable best efforts to obtain all regulatory clearancesnecessary to consummate the Merger at the earliest practicable date.

In addition, in order to consummate the Merger, ERI and Caesars maybe required to comply with conditions, terms, obligations or restrictions imposed by regulatory entities, including divestitures, and such conditions, terms, obligations or restrictions may have the effect of delaying consummation of the Merger,imposing additional material costs on or materially limiting the revenue of the combined company after the consummation of the Merger, or otherwise reducing the anticipated benefits to ERI and Caesars of the Merger. Such conditions, terms,obligations or restrictions may result in the delay or abandonment of the Merger.

Gaming regulatory approvals may not be received, may take longerthan expected or may impose conditions that are not presently anticipated or cannot be met.

Consummation of the Merger isconditioned on the receipt of approvals from a number of gaming regulatory authorities, including, among others, the Ak Chin Community Tribal Gaming Commission, the Arizona Department of Gaming, the Cherokee Tribal Gaming Commission, the ColoradoDivision of Gaming, the Illinois Gaming Board, the Indiana Gaming Commission, the Indiana Horse Racing Commission, the Iowa Racing and Gaming Commission, the Kentucky Horse Racing Commission, the Louisiana Gaming Control Board, the Louisiana StateRacing Commission, the Maryland Lottery and Gaming Control Agency, the Mississippi Gaming Commission, the Missouri Gaming Commission, the National Indian Gaming Commission, the Nevada Gaming Commission, the New Jersey Casino Control Commission, theNew Jersey Division of Gaming Enforcement, the Pennsylvania Gaming Control Board, the Pennsylvania State Horse Racing Commission, the Ohio Lottery Commission, the Gauteng Gambling Board (South Africa), the Alcohol and Gaming Commission of Ontario,the Ministry of Culture, Sports and Tourism (Korea) and the Gambling Commission (United Kingdom). In some instances, these approvals include findings of suitability for ERI’s officers and continuing members of the ERI Board. These approvals andfindings may not be received at all, may not be received in a timely fashion and/or may contain conditions on the consummation of the Merger. In addition, these regulatory bodies may impose conditions on the granting of such approvals and findings.Such conditions and the process of obtaining such regulatory approvals could have the effect of delaying consummation of the Merger or of imposing additional costs or limitations on the combined company following the Merger. In addition, to theextent any officer of ERI is found unsuitable, ERI would need to find a replacement, which may take time and could adversely impact ERI’s financial and operational performance, including ERI’s ability to successfully consummate the Mergerand integrate Caesars into ERI. Any such finding of unsuitability by regulatory authorities and resulting resignation or removal of an officer of ERI could also impact the governance structure of the combined company following the Merger.

There can be no assurance that ERI will be able to secure the financing in connection with the Merger and the transactions contemplated by the MergerAgreement on acceptable terms, in a timely manner, or at all.

ERI intends to finance at least a portion of the cash required inconnection with the Merger, including expenses in connection with the Merger, with the Debt Financing in accordance with the terms of the A&R Commitment Letter. The A&R Commitment Letter provides for funding to (a) ERI of (i) a$1,000.0 million senior secured revolving credit facility, (ii) a $3,000.0 million senior secured term loan B facility, (iii) a

 

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$3,600.0 million senior secured 364-day bridge facility and (iv) a $1,800.0 million senior unsecured bridge loan facility and (b) asubsidiary of Caesars a $2,400.0 million senior secured incremental term loan B facility. The senior secured 364-day bridge facility will only be funded in accordance with the A&R Commitment Letter tothe extent that the net cash proceeds of certain asset sales and certain transactions contemplated with VICI as described in the next succeeding paragraph are not available on the Closing Date to be applied to finance the Merger and expenses inconnection therewith. In addition to the Debt Financing, ERI also recently entered into letter agreements with certain financial institutions which additional letter agreements provide (A) for commitments from such financial institutions toprovide an increase to the senior secured term loan B facility being provided to ERI and additional revolving credit facility commitments for ERI and (B) the engagement of such financial institutions to act as arrangers for additional debtfinancing, in each case, in the event ERI elects to refinance certain existing indebtedness of CRC and its subsidiaries and for working capital and general corporate purposes upon the consummation of the Merger. Additionally, ERI may continue toevaluate alternative financing structures and amounts based on its needs and capital markets conditions. The proceeds of the Debt Financing may be used (1) to pay all or a portion of the cash portion of the Merger Consideration, (2) torefinance all of ERI’s existing syndicated bank credit facilities and outstanding senior notes, (3) to refinance certain of Caesars’ and its subsidiaries’ existing debt, (4) to pay transaction fees and expenses related tothe foregoing and/or (5) for working capital and general corporate purposes. The availability of the borrowings under the Debt Financing is subject to the satisfaction of certain customary conditions, including the substantially concurrentconsummation of the Merger. For a more detailed discussion of the A&R Commitment Letter and the proposed Debt Financing, see “Bank Commitment Letter and Related Financing” beginning on page 222. In the event some or all of thefinancing contemplated by the A&R Commitment Letter is not available, ERI is obligated to use its reasonable best efforts to obtain alternative financing from alternative institutions in an amount at least equal to the amount of such unavailableportion of the financing contemplated by the A&R Commitment Letter and in an amount sufficient to enable ERI to consummate the Merger.

In connection with the execution of the Merger Agreement and the A&R Commitment Letter, ERI entered into the Master Transaction Agreementwith VICI. ERI intends to finance at least a portion of the cash required in connection with the Merger with the proceeds of transactions that are subject to the Master Transaction Agreement, including approximately $1.8 billion of proceedsfrom the expected sale leaseback of certain properties expected to be acquired upon consummation of the Merger, including Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City (or, under certain circumstances, ifnecessary, certain replacement properties specified in the Master Transaction Agreement), and approximately $1.4 billion of proceeds expected to be received in consideration of the amendment of certain existing leases between subsidiaries ofCaesars and VICI. The consummation of the transactions contemplated by the Master Transaction Agreement is subject to satisfaction of certain conditions, including execution of agreements, receipt of required regulatory approvals, the accuracy ofthe representations and warranties, compliance with covenants, delivery of certain closing deliverables and the absence of any governmental order or action seeking to prohibit the consummation of the transactions contemplated by the MasterTransaction Agreement. ERI is currently negotiating the sale leaseback documents, lease amendments and other agreements contemplated by the Master Transaction Agreement and cannot assure you as to the timing or outcome of those negotiations withVICI. Although ERI expects the transactions contemplated by the Master Transaction Agreement to be consummated substantially concurrently with the Merger, there can be no assurance as to the timing of the closing of such transactions or that theclosings will occur on the terms set forth in the Master Transaction Agreement or at all. In the event that the closings of some or all of the transactions contemplated by the Master Transaction Agreement are delayed or do not occur, ERI may berequired to incur the 364-day secured bridge facility under the Debt Financing or other additional indebtedness to pay the cash portion of the Merger Consideration, repay ERI’s and certain ofCaesars’ and its subsidiaries’ outstanding debt and/or pay transaction fees and expenses related thereto, which could have an adverse impact on the business, financial condition and results of operations of the combined company followingthe Merger.

The consummation of the Merger is not conditioned on ERI’s ability to obtain financing or the consummation of thetransactions contemplated by the Master Transaction Agreement. If ERI is unable to obtain

 

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funding contemplated by the A&R Commitment Letter from its financing sources for the cash required in connection with the Merger, ERI may be compelled to specifically perform its obligationsto consummate the Merger or could otherwise be subject to claims under the Merger Agreement, each of which could have a material adverse effect on ERI.

Litigation challenging the Merger could delay or prevent the consummation of the Merger.

One of the conditions to the Merger is that no law, statute, rule, regulation, ordinance, code, ruling, subpoena, order, writ, injunction,decree, judgment, ruling, determination, directive, award or settlement issued by a governmental entity (including any gaming authority) shall have been adopted, promulgated or issued that would prohibit, restrain, enjoin or render unlawful theconsummation of the Merger or the Share Issuance. As of October 3, 2019, seven complaints have been filed challenging the Merger. Six of the complaints generally assert claims under Sections 14(a) and 20(a) of the Exchange Act challengingthe adequacy of certain disclosures made in the version of this joint proxy statement/prospectus filed with the SEC on September 3, 2019. Those complaints seek, among other relief, an injunction preventing consummation of the Merger, damages inthe event that the Merger is consummated and attorneys’ fees. The seventh complaint, filed in Nevada state court, asserts claims for breach of fiduciary duty by, among other things, approving the Merger at an unfair price and disseminatingmaterially misleading information in connection with the Merger. For a more detailed description of litigation in connection with the Merger, see “The Merger—Litigation Relating to the Merger” beginning on page 190. Therecan be no assurance that additional claims will not be filed by stockholders of Caesars or ERI seeking damages relating to, or otherwise challenging, the Merger. If the plaintiffs in any such action secure injunctive or other relief prohibiting,delaying or otherwise adversely affecting ERI’s and Caesars’ ability to consummate the Merger, then such injunctive or other relief may prevent the Merger from becoming effective within the expected time frame or at all. If consummation ofthe Merger is prevented or delayed, it could result in substantial costs to ERI and Caesars. In addition, whether or not any plaintiff’s claim is successful, ERI and Caesars could incur significant costs in connection with any such litigation,including costs associated with the indemnification of ERI’s and Caesars’ directors and officers, and the attention and resources of the respective management of ERI and Caesars could be diverted from the consummation of the Merger andongoing business activities, which could have an adverse effect on ERI’s and Caesars’ respective business, financial condition and results of operations.

Certain directors and executive officers of Caesars may have potential conflicts of interest which may influence their support of the adoption of theMerger Agreement.

Some of Caesars’ directors and executive officers have interests in the Merger that are different from, orin addition to, those of Caesars stockholders generally. These interests include, among others, potential severance benefits and other payments and the treatment of outstanding equity awards pursuant to the Merger Agreement. Further, at least fiveof Caesars’ current directors will become directors of ERI following the consummation of the Merger. Although the rest of Caesars’ directors will not become directors of ERI and Caesars’ executive officers are not expected to becomeexecutive officers of ERI after the Merger, ERI will indemnify and maintain liability insurance for all of the directors and officers of Caesars for their services as directors and officers before the Merger. Please refer to “TheMerger—Interests of Caesars’ Directors and Executive Officers in the Merger” beginning on page 178 for a discussion of these interests.

The Merger Agreement contains provisions that limit Caesars’ and ERI’s ability to pursue alternatives to the Merger, could discourage apotential competing acquiror of ERI or Caesars from making a favorable alternative transaction proposal and, in specified circumstances, could require ERI or Caesars to pay the other party a termination fee.

The Merger Agreement contains certain provisions that restrict Caesars’ and ERI’s ability to solicit, initiate, knowingly facilitateor knowingly encourage any inquiries regarding, or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, a competing proposal, engage, continue or otherwise participate in any substantive discussions ornegotiations regarding, or furnish any non-public information to any

 

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person in connection with or for the purpose of encouraging or facilitating, a competing proposal, subject to customary exceptions and limitations. In addition, the other party generally has anopportunity to offer to modify the terms of the Merger Agreement in response to any third-party alternative transaction proposal before a party’s board of directors may change, qualify, withhold, withdraw or modify its recommendation withrespect to the proposal to adopt the Merger Agreement and approve the Merger (Caesars Proposal No. 1) or the Share Issuance Proposal, as applicable. Upon termination of the Merger Agreement in certain circumstances relating to alternativetransactions to the Merger, Caesars will be required to pay a termination fee of approximately $418.4 million to ERI, and ERI will be required to pay a termination fee of approximately $154.9 million to Caesars. In addition, each partywill be required to reimburse the other party’s expenses in an amount not to exceed $50.0 million if the Merger Agreement is terminated because of the failure to obtain the required approval of such party’s stockholders (creditableagainst any termination fee that may subsequently be paid). See the sections entitled “The Merger Agreement—No Solicitation of Alternative Proposals,” “The Merger Agreement—Termination of the MergerAgreement” and “The Merger Agreement—Termination Fee; Expenses.” ERI may also be required to pay VICI a fee of $75.0 million pursuant to the terms of the Master Transaction Agreement.

These provisions could discourage a potential third-party acquiror or merger partner that might have an interest in acquiring all or asignificant portion of ERI or Caesars or pursuing an alternative transaction with either party from considering or proposing such a transaction (even if, in the case of an acquisition of Caesars, it were prepared to pay consideration with a higherper share price than the per share price proposed to be received in the Merger) or might result in a potential third-party acquiror or merger partner proposing to pay a lower price to the stockholders of Caesars or the stockholders of ERI than itmight otherwise have proposed to pay because of the added expense of the applicable termination fee and expense reimbursement that may become payable in certain circumstances.

If the Merger is not consummated, the price of ERI or Caesars common stock and the parties’ future businesses and operations could be harmed.

If the Merger is not consummated, ERI and Caesars will not have realized any of the potential benefits of the Merger having beenconsummated and may be subject to material risks, including:

 

  

failure to consummate the Merger may result in negative publicity and a negative impression of Caesars and/or ERIin the investment community;

 

  

the diversion of management attention fromday-to-day business and the unavoidable disruption to their respective employees and relationships with customers, vendors, joint venture partners and other thirdparties as a result of efforts and uncertainties relating to the Merger may detract from the ability of ERI or Caesars to grow revenue and minimize costs, which, in turn, may lead to a loss of market position that ERI or Caesars could be unable toregain if the Merger does not occur;

 

  

under the Merger Agreement, ERI and Caesars are subject to certain restrictions on the conduct of theirbusinesses prior to consummating the Merger, which may affect their ability to execute certain of their respective business strategies or respond effectively to competitive pressures and industry developments;

 

  

in certain circumstances, Caesars may be required to pay a termination fee of approximately $418.4 millionto ERI, ERI may be required to pay a termination fee of approximately $154.9 million or approximately $836.8 million to Caesars, and each party may be required to reimburse the other party’s expenses in an amount not to exceed$50.0 million;

 

  

ERI may be required to pay a $75.0 million termination fee to VICI pursuant to the terms of the MasterTransaction Agreement if the Master Transaction Agreement is terminated as a result of the termination of the Merger Agreement;

 

  

if the ERI Board or the Caesars Board seeks an alternative transaction to the Merger, a potential third-partyacquiror or merger partner may propose to pay a lower price to ERI stockholders or Caesars stockholders, as applicable, as a result of the applicable termination fee and expense reimbursement;

 

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the price of ERI common stock or Caesars common stock may decline to the extent that the current market price ofERI common stock or Caesars common stock, as applicable, reflects a higher price than it otherwise would have based on the assumption that the Merger will be consummated;

 

  

ERI and Caesars would have incurred significant expenses relating to the Merger that they may be unable torecover; and

 

  

ERI and Caesars may be subject to litigation related to the failure to consummate the Merger or to perform theirrespective obligations under the Merger Agreement.

Caesars stockholders who deliver shares of Caesars common stock to make anelection will not be able to sell those shares unless they revoke such election prior to the Election Deadline.

If you are aholder of Caesars common stock and want to make an election, you must deliver to the Exchange Agent by the Election Deadline a properly completed and signed election form along with stock certificates (or a properly completed notice of guaranteeddelivery) or, in the case of book-entry shares, any additional documents specified in the procedures set forth in the election form. You will not be able to sell any shares of Caesars common stock that you have delivered to the Exchange Agent unlessyou revoke your election before the Election Deadline by providing written notice to the Exchange Agent. If you do not revoke your election, you will not be able to liquidate your investment in Caesars common stock for any reason until you receivethe Cash Election Consideration and/or the Stock Election Consideration pursuant to the Merger Agreement. In the time between delivery of your shares to the Exchange Agent and the consummation of the Merger, the market price of Caesars common stockor ERI common stock may change, and you might otherwise want to sell your shares of Caesars common stock to gain access to cash, make other investments, or reduce the potential for a decrease in the value of your investment. If the Merger isunexpectedly delayed, the period between delivery of your shares to the Exchange Agent and the consummation of the Merger could extend for a significant period of time. Caesars stockholders can shorten the period during which they cannot sell theirshares by delivering their election shortly before the Election Deadline. However, elections received after the Election Deadline will not be accepted or honored.

Caesars stockholders who do not properly make an election before the Election Deadline may be unable to sell their shares during the period between theElection Deadline and the consummation of the Merger because there may not be a liquid market for shares of Caesars common stock.

Caesars stockholders who do not make a valid election may be unable to transfer (including by sale) all or some of their shares of Caesarscommon stock during the period between the Election Deadline and the consummation of the Merger because all shares of Caesars common stock for which an election has been properly made will no longer be transferable and, as a result, there may not bea trading market that will provide Caesars stockholders with adequate liquidity to make the desired transfer. Furthermore, Caesars stockholders who do not make a valid election prior to the Election Deadline give up the choice to elect theirpreferred form of consideration and could instead receive the Cash Election Consideration for all of their shares of Caesars common stock, the Stock Election Consideration for all of their shares of Caesars common stock, or a combination of the CashElection Consideration and the Stock Election Consideration, depending on elections that have been made by other Caesars stockholders.

Announcementor consummation of the Merger may trigger change in control or other provisions in certain agreements to which Caesars is a party.

The announcement or consummation of the Merger may trigger change in control or other provisions in certain agreements to which Caesars is aparty. If ERI and Caesars are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating the agreements or seeking monetary damages. Even if ERI andCaesars are able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to the combined company.

 

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Risks Relating to the Combined Company Following the Merger

The integration of ERI and Caesars following the Merger may present significant challenges. Neither ERI nor Caesars can be sure that it will be able torealize the anticipated benefits of the Merger in the anticipated time frame or at all.

ERI’s and Caesars’ ability torealize the anticipated benefits of the Merger will depend, to a large extent, on ERI’s ability to integrate Caesars’ businesses into ERI in the anticipated time frame or at all. ERI may face significant challenges in combiningCaesars’ operations into its operations in a timely and efficient manner. The combination of two independent businesses is a complex, costly and time-consuming process. As a result, ERI will be required to devote significant managementattention and resources to integrating the business practices and operations of Caesars into those of ERI. The integration process may disrupt the businesses and, if implemented ineffectively or inefficiently, would preclude realization of the fullbenefits expected by ERI and Caesars. The failure to successfully integrate Caesars into ERI and to manage the challenges presented by the integration process successfully may result in an interruption of, or loss of momentum in, the business of ERIor Caesars, which may have the effect of depressing the market price of ERI common stock following the Effective Time.

ERI may be unable to realizeanticipated synergies or may incur additional costs.

ERI expects to realize cost synergies from combining administrative and otheroverlapping functions of ERI and Caesars, as well as revenue synergies. However, ERI will be required to incur costs, including severance and related expenses, to realize the anticipated synergies. In addition, the amount of synergies realized afterconsummation of the Merger may be reduced from anticipated levels as a result of cost reduction programs that have been implemented, or may be implemented, by Caesars prior to consummation of the Merger, including Caesars’ previously announcedinitiatives expected to result in cost savings of $50 million. While ERI’s management believes the combined company will benefit from synergies, ERI may be unable to realize all of these synergies within the time frame expected or at all.In addition, ERI may incur additional or unexpected costs in order to realize these synergies.

The trading price of shares of ERI common stockafter the Merger may be affected by factors different from those affecting the price of shares of Caesars common stock or shares of ERI common stock before the Merger.

If the Merger is consummated, holders of Caesars common stock who receive shares of ERI common stock in exchange for such shares of Caesarscommon stock will be investing in ERI common stock. The results of operations of ERI, as well as the trading price of ERI common stock, after the Merger may be affected by factors different from those currently affecting ERI’s or Caesars’results of operations and the trading price of Caesars common stock. For a discussion of the businesses of ERI and Caesars and of certain factors to consider in connection with those businesses, see the documents incorporated by reference into thisjoint proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page 270.

Theunaudited pro forma financial statements are presented for illustrative purposes only and should not be viewed as a forecast of ERI’s financial condition or results of operations following the Merger. Specifically, the unaudited pro formafinancial statements do not reflect the effect of any divestitures that may be required in connection with the Merger.

Theunaudited pro forma financial statements have been derived from the historical financial statements of ERI and Caesars and certain adjustments and assumptions have been made regarding ERI after giving effect to the Merger. The information upon whichthese adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with complete accuracy. Moreover, the unaudited pro forma financial statements do not reflect all costs that areexpected to be incurred or savings to be achieved by the combined company in connection with the Merger. For example, neither the impact of any

 

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incremental costs incurred in integrating the two companies nor any potential cost savings is reflected in the unaudited pro forma financial statements. In addition, the unaudited pro formafinancial statements do not reflect the effect of any divestitures that may be required in order to obtain regulatory approvals in connection with the Merger or the effect of Caesars’ previously announced sale of the Rio All-Suite Hotel &Casino. As a result, the actual financial condition and results of operations of ERI following the Merger will likely not be consistent with, or evident from, and may differ materially from, these unaudited pro forma financial statements. Inaddition, the assumptions used in preparing the unaudited pro forma financial statements may not prove to be accurate, and other factors may affect ERI’s financial condition or results of operations following the Merger. Therefore, stockholdersof ERI and stockholders of Caesars should not place undue reliance on the pro forma financial statements when deciding whether to vote for their respective proposals relating to the Merger. Please refer to “Unaudited Pro Forma CondensedCombined Financial Statements” beginning on page 70.

The Merger is expected to result in significant transaction costs and costsassociated with integration of the combined business.

The total transaction fees, expenses and similar costs relating to theMerger expected to be incurred by ERI and Caesars are approximately $169 million. In addition, ERI will incur integration and restructuring costs following the consummation of the Merger as it integrates Caesars’ business and operations withthose of ERI. Although ERI expects that the realization of efficiencies related to the integration of Caesars’ business will offset incremental transaction, integration and restructuring costs over time, ERI cannot give any assurance that thisnet benefit will be achieved in the near term, or at all.

Unanticipated costs relating to the Merger could reduce ERI’s future earnings.

ERI believes that it has reasonably estimated the likely incremental costs of the combined operations of ERI and Caesars followingthe Merger. However, it is possible that unexpected transaction costs such as taxes, fees or professional expenses or unexpected future operating expenses such as unanticipated costs to integrate the two businesses or increased personnel costs, aswell as other types of unanticipated adverse developments, could have an adverse effect on the business, financial condition and results of operations of the combined company following the Merger. In addition, if actual costs are materiallydifferent than expected costs, the Merger could have a significant dilutive effect on ERI’s earnings.

ERI will have a substantial amount ofdebt outstanding following the Merger and may incur additional indebtedness in the future, which could restrict ERI’s ability to pay dividends and fund working capital and planned capital expenditures.

ERI expects to enter into the Debt Financing in order to consummate the Merger and refinance ERI’s existing syndicated bank creditfacilities and senior notes, and a portion of Caesars’ outstanding indebtedness will remain outstanding following the consummation of the Merger. As a result, ERI will have a significant amount of additional indebtedness outstanding followingthe consummation of the Merger. In addition, ERI expects to have the ability to incur additional debt under its anticipated $1.0 billion revolving credit facility and CRC’s existing $1.0 billion revolving credit facility. ERI alsocontinually evaluates alternative financing structures and amounts based on its needs and capital markets conditions. ERI may be required to incur indebtedness under the 364-day secured bridge facilityprovided under the Debt Financing or other additional indebtedness to finance the Merger Consideration if the transactions contemplated by the Master Transaction Agreement or the previously announced sales of certain of ERI’s properties are notconsummated prior to or in connection with the consummation of the Merger. This amount of leverage could have important consequences, including:

 

  

ERI may be required to use a substantial portion of its cash flow from operations to make interest and principalpayments on ERI’s debt, which will reduce funds available for operations, future business opportunities and dividends;

 

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ERI may have limited flexibility to react to changes in its business and its industry;

 

  

it may be more difficult for ERI to satisfy its other obligations;

 

  

ERI may have a limited ability to borrow additional funds or to sell assets to raise funds if needed for workingcapital, capital expenditures, acquisitions or other purposes;

 

  

ERI may become more vulnerable to general adverse economic and industry conditions, including changes in interestrates; and

 

  

ERI may be at a disadvantage compared to its competitors that have less debt.

Future interest expense will be significantly higher than historic interest expense as a result of higher levels of indebtedness incurred toconsummate the Merger. ERI’s ability to make payments on its debt and potential to pay dividends on its common stock, which ERI has not historically done, will depend on its ability to generate cash in the future, which will depend on manyfactors beyond its control. ERI cannot assure you that:

 

  

its business will generate sufficient cash flow from operations to service and repay its debt, pay dividends onits common stock and fund working capital and planned capital expenditures;

 

  

future borrowings will be available under its credit facilities or any future credit facilities in an amountsufficient to enable it to repay its debt, pay dividends on its common stock and fund working capital and planned capital expenditures; or

 

  

it will be able to refinance any of its debt on commercially reasonable terms or at all.

If ERI cannot generate sufficient cash from its operations to meet its debt service obligations, it may need to reduce or delay capitalexpenditures, the development of its business generally and any acquisitions. If ERI becomes unable to meet its debt service and repayment obligations (or those of its subsidiaries following the Merger), it (or its applicable subsidiaries) would bein default under the terms of the applicable credit agreement or indenture, which would allow its lenders or noteholders to declare all outstanding indebtedness thereunder to be due and payable and terminate any commitments to lend thereunder. Ifthe amounts outstanding under its (or its subsidiaries’) credit facilities or indentures were to be accelerated, ERI cannot assure you that its (or its subsidiaries’) assets would be sufficient to repay in full the money owed.

Following consummation of the Merger and the transactions contemplated by the Master Transaction Agreement, ERI and its subsidiaries will be required topay a significant portion of their cash flow from operations to third parties pursuant to leasing and related arrangements.

ERIand Caesars currently lease certain parcels of land on which several of their respective properties are located and, pursuant to the terms of Master Transaction Agreement, are expected to enter into leases with VICI with respect to parcels of landon which Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City are located and will increase the lease rate on an existing lease agreement between a subsidiary of Caesars and VICI, which will require ERI’ssubsidiaries that are parties to such leases to apply a significant amount of their cash flow to required rental payments. These leases also are expected to require certain levels of capital expenditures to be made on the properties leased underthese leases on an ongoing basis. As a result of the obligation to pay rent and make capital expenditures under the new and existing leases, the ability of the combined company to fund its operations or development projects, raise capital, makeacquisitions and otherwise respond to competitive and economic changes may be adversely affected. For example, the obligations under these lease agreements may:

 

  

make it more difficult for the combined company to satisfy its obligations with respect to its (or itssubsidiaries’) indebtedness and to obtain additional indebtedness;

 

  

increase vulnerability to general or regional adverse economic and industry conditions or a downturn in thecombined company’s business;

 

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require the combined company to dedicate a substantial portion of its cash flow from operations to making leasepayments, thereby reducing the availability of cash flow to fund working capital, capital expenditures and other general corporate purposes and acquisitions;

 

  

limit flexibility in planning for, or reacting to, changes in the combined company’s business and theindustry in which it operates; and

 

  

restrict the combined company’s ability to raise capital, make acquisitions and divestitures and engage inother significant transactions.

In addition, the annual rent escalations under these lease agreements will continue toapply regardless of the amount of cash flows generated by the properties that are subject to these lease agreements. Accordingly, if the cash flows generated by such properties decrease, or do not increase at the same rate as the rent escalations,the rents payable under these lease agreements could comprise a higher percentage of the cash flows generated by the applicable entity, which could exacerbate, perhaps materially, the issues described above. Any of the above listed factors couldhave an adverse effect on the combined company’s business, financial condition and results of operations.

Moreover, if the combinedcompany were to default on any one or more of these lease agreements, the applicable lessors could terminate the affected leases and the combined company could lose possession of the land leased under the affected leases and any improvements on thatland, including the hotels and casinos. A termination of these lease agreements could result in a default under ERI’s (or its subsidiaries’) applicable credit agreements, which would allow its lenders to declare all outstanding borrowingsto be due and payable and terminate any commitments thereunder, and could have a material adverse effect on the combined company’s business, financial condition and results of operations.

The guaranties to be entered into by ERI in connection with the existing and new leases with VICI will include covenants that may restrict the abilityof ERI to pay dividends and repurchase its shares following the Merger.

ERI will guaranty the obligations of its subsidiariesunder the existing and new leases with VICI pursuant to which ERI’s subsidiaries will lease certain parcels of land on which several of their respective properties are located. These guaranties will include covenants, which, among other things,may restrict the ability of ERI to pay dividends or repurchase its shares if its market capitalization is less than $5.5 billion, and may restrict the ability of ERI to make non-cash dividends, in eachcase, following the Merger.

Delay or failure to consummate the sale of properties previously announced by ERI may require ERI to incur additionaldebt to pay the cash portion of the Merger Consideration or to repay outstanding indebtedness of ERI or otherwise adversely impact the business, financial condition and results of operations of the combined company following the Merger.

On June 17, 2019, ERI entered into an agreement to sell Lady Luck Caruthersville, Isle Casino Cape Girardeau and Mountaineer Casino,Racetrack & Resort for aggregate consideration of $385.0 million, and on July 10, 2019, ERI entered into an agreement to sell Isle of Capri Casino Kansas City and Lady Luck Casino Vicksburg for aggregate consideration of$230.0 million, in each case subject to certain adjustments. The consummation of each transaction is subject to satisfaction of customary conditions, including receipt of required regulatory approvals, the accuracy of the parties’representations and warranties, compliance with covenants, delivery of certain closing deliverables and the absence of any governmental order or action seeking to prohibit the consummation of the transaction. Although ERI expects such saletransactions to be consummated prior to consummation of the Merger, there can be no assurance as to the timing of the closing of such sales or that the closings will occur on the terms set forth in the purchase agreements relating to the sales, orat all. In the event that the closing of either sale is delayed or does not occur, ERI may be required to incur the 364-day secured bridge facility under the Debt Financing or other additional indebtedness topay the cash portion of the Merger

 

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Consideration, repay ERI’s and certain of Caesars’ and its subsidiaries’ outstanding debt and/or to pay transaction fees and expenses related thereto, which could adversely impactthe business, financial condition and results of operations of the combined company following the Merger.

On September 26, 2019, ERIand VICI entered into the Real Estate Purchase Agreements for the sale of Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City for aggregate consideration of approximately $1.8 billion, subject to satisfaction ofcustomary conditions, including receipt of required regulatory approvals. In the event that the closing of any of the sales is delayed or does not occur within a certain timeframe, ERI may be required to incur the364-day secured bridge facility under the Debt Financing or other additional indebtedness to pay the cash portion of the Merger Consideration, to repay ERI’s and certain of Caesars’ and itssubsidiaries outstanding debt and/or to pay transaction fees and expenses related thereto, which could adversely impact the business, financial condition and results of operations of the combined company following the Merger.

Restrictions in ERI’s debt agreements may prevent ERI from paying dividends.

ERI has not historically paid dividends to its stockholders. ERI’s ability to pay dividends in the future will be restricted by thefinancing agreements expected to be in place upon consummation of the Merger and the agreements governing Caesars’ debt that remains outstanding following consummation of the Merger. Please refer to “Bank Commitment Letter and RelatedFinancing” beginning on page 222.

The Delaware Charter will provide that the Court of Chancery of the State of Delaware will be thesole and exclusive forum for substantially all disputes between ERI and its stockholders, which could limit ERI stockholders’ ability to obtain a favorable judicial forum for disputes with ERI or its directors, officers or employees if theDelaware Conversion is approved.

If the Delaware Conversion is approved, the Delaware Charter will provide that unless ERIconsents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of ERI, (b) any actionasserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of ERI to ERI or its stockholders, (c) any action asserting a claim against ERI or any director, officer or other employee of ERI arising pursuantto any provision of the DGCL, the Delaware Charter or the Delaware Bylaws or (d) any action asserting a claim against ERI or any director, officer or other employee of ERI governed by the internal affairs doctrine, in each case, other thansuits brought to enforce any liability or duty created by the Securities Act or the Exchange Act, or any claim for which the federal courts have exclusive jurisdiction. The choice of forum provision may limit a stockholder’s ability to bring aclaim in a judicial forum that it finds favorable for disputes with ERI or its directors, officers or other employees, which may discourage such lawsuits against ERI and its directors, officers and other employees. Alternatively, if a court were tofind the choice of forum provision contained in the Delaware Charter to be inapplicable or unenforceable in an action, ERI may incur additional costs associated with resolving such action in other jurisdictions, which could harm the combinedcompany’s business, financial condition and results of operations.

The aggregate ownership and voting interest of the current Caesarsstockholders in ERI after the Merger will be lower than they currently have in Caesars and they will exercise less influence over management of ERI than they currently exercise over management of Caesars.

Following the consummation of the Merger, Caesars stockholders who receive shares of ERI common stock in exchange for their shares of Caesarscommon stock in the Merger will own in the aggregate a significantly smaller percentage of ERI common stock than they currently own of Caesars common stock. Immediately following the Merger, those Caesars stockholders and holders of Caesarsconvertible notes are expected to own in the aggregate (excluding any shares of ERI common stock they may own or acquire prior to consummation of the Merger and assuming that all Caesars convertible notes are converted immediately followingconsummation of the Merger into

 

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$8.40 in cash and 0.0899 shares of ERI common stock for each share of Caesars common stock into which such Caesars convertible notes were convertible immediately prior to the Merger)approximately 49% of the outstanding shares of ERI common stock, based on the number of shares of ERI common stock and Caesars common stock, and the principal amount of Caesars convertible notes, outstanding on September 27, 2019. Based on the termsof the indenture governing the Caesars convertible notes (see “Note 2—Calculation of Purchase Consideration” under “Unaudited Pro Forma Condensed Combined Financial Statements”), the mix of cash and ERI common stockpayable upon conversion of the Caesars convertible notes will likely differ from the assumed amounts. Consequently, if ERI’s management pursues strategies or undertakes risks that differ from the investment preferences of Caesars stockholders,Caesars stockholders will have less influence over the management and policies of ERI than they currently exercise over the management and policies of Caesars.

The shares of ERI common stock following the Merger will have different rights from the shares of Caesars common stock and ERI common stock prior to theMerger.

Caesars stockholders’ rights are currently governed by the Caesars certificate of incorporation, the Caesars bylawsand Delaware law. Those Caesars stockholders who receive the Stock Election Consideration in the Merger will, upon consummation of the Merger, become stockholders of ERI and their rights will be governed by the ERI certificate of incorporation (asit may be amended if either the Delaware Conversion Proposal or the Charter Amendment Proposal is approved), the ERI A&R Nevada Bylaws and, depending on whether ERI stockholders approve the Delaware Conversion Proposal, either Delaware law orNevada law. Please refer to “Comparison of Stockholders’ Rights” beginning on page 235.

The composition of the ERI Boardfollowing the Merger will be different than the current composition of the ERI Board and the Caesars Board, and the composition of ERI’s management team following the Merger will be different than the current composition of Caesars’management team, which, in each case, may affect the strategy and operations of the combined company.

Upon consummation of theMerger, the composition of the ERI Board will be different than the current composition of the ERI Board and of the Caesars Board. The Caesars Board currently consists of eleven members and the ERI Board currently consists of nine members. TheMerger Agreement provides that the ERI Board following the consummation of the Merger will consist of up to eleven members to be designated by ERI, including either five or six current members of the Caesars Board, depending on whether certaincurrent members of the ERI Board have Ceased to Serve. In addition, it is expected that the existing executive officers of ERI will continue to manage the combined company following the consummation of the Merger.

The composition of the ERI Board following the consummation of the Merger may result in changes to the combined company’s businessstrategy and operating decisions as compared to those of ERI or Caesars prior to the Merger. Any such changes, if unsuccessful, could have an adverse effect on the combined company’s business, financial condition and results of operations.Please refer to “The Merger—Composition of the ERI Board and Management Following the Merger” beginning on page 189.

The Share Issuance may cause the market price of ERI common stock to decline.

In connection with the consummation of the Merger, based on the number of shares of Caesars common stock and the principal amount of Caesarsconvertible notes outstanding on September 27, 2019, ERI expects to issue approximately 76 million shares of ERI common stock (including and assuming that all Caesars convertible notes are converted immediately following consummation of theMerger into $8.40 in cash and 0.0899 shares of ERI common stock for each share of Caesars common stock into which such Caesars convertible notes were convertible immediately prior to the Merger), which will represent approximately 49% of the issuedand outstanding shares of ERI common stock after consummation of the Merger. Based on the terms of the indenture governing the Caesars convertible notes (see “Note 2—Calculation of Purchase Consideration” under “Unaudited ProForma Condensed Combined Financial Statements”), the mix of cash and ERI common stock

 

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payable upon conversion of the Caesars convertible notes will likely differ from the assumed amounts. ERI expects that some Caesars stockholders who receive shares of ERI common stock are likelyto sell them promptly, especially Caesars stockholders who elected to receive the Cash Election Consideration but received the Stock Election Consideration instead due to the proration provisions described in this joint proxy statement/prospectus.Both the issuance of this amount of new shares and the subsequent sales of these shares may cause the market price of ERI common stock to decline.

Following the consummation of the Merger, investors in the combined company will own an institution with different financial and other characteristicsthan either ERI or Caesars on a standalone basis.

Following the consummation of the Merger, current stockholders of ERI andCaesars will become stockholders in a combined company that will have different financial and other characteristics than either company had on a standalone basis prior to the Merger. For example, the Merger will result in a combined company withhigher dollar amounts of total assets, outstanding debt, interest expense, rent obligations under leases and goodwill compared to the amounts currently existing for each of them individually. If ERI is unable to successfully combine the businessesof ERI and Caesars, ERI’s future earnings may be adversely affected, which in turn could adversely impact the amount of capital of the combined company following the Merger.

ERI’s ability to use Caesars’ net operating loss carryforwards that are not utilized in connection with the Merger may become limited as aresult of the Merger.

As of December 31, 2018, Caesars reported approximately $2.6 billion of net operating loss(“NOL”) carryforwards for U.S. federal income tax purposes. Certain transactions relating to the Merger are expected to give rise to taxable income for Caesars, which income is expected to be offset by the NOL carryforwards, reducing theamount of Caesars’ NOL carryforwards available to offset future taxable income. Additionally, under Section 382 of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOLs (and certain other tax attributes) to offset its post-change income may be limited. In the event the Merger causes an ownership change with respect to Caesars on the effective date of the Merger,Section 382 of the Code would apply to limit ERI’s use of any NOLs remaining after the effective date of the Merger. In addition, if there is an ownership change of Caesars as a result of the Merger and recently proposed regulations arefinalized before the Merger is consummated, the combined company’s ability to utilize Caesars’ NOLs may be more severely limited than would be the case under existing rules.

Risks Relating to Caesars

Caesars is, and will continue to be, subject to the risks described in Part I, Item 1A in Caesars’ Annual Report on Form 10-K for the year ended December 31, 2018 and in Part II, Item 1A of Caesars’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, which areincorporated by reference into this joint proxy statement/prospectus. Please refer to “Where You Can Find More Information” beginning on page 270 for the location of the Caesars information incorporated by reference into thisjoint proxy statement/prospectus.

Risks Relating to ERI

ERI is, and will continue to be, subject to the risks described in Part I, Item 1A in ERI’s Annual Report on Form 10-K for the year ended December 31, 2018 and in Part II, Item 1A of ERI’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, which areincorporated by reference into this joint proxy statement/prospectus. Please refer to “Where You Can Find More Information” beginning on page 270 for the location of the ERI information incorporated by reference into this jointproxy statement/prospectus.

 

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THE COMPANIES

ERI and Merger Sub

ERI is a geographically diversified gaming and hospitality company with twenty-six gaming facilities intwelve U.S. states as of the date of this joint proxy statement/prospectus. ERI’s properties, which are located in Ohio, Louisiana, Nevada, New Jersey, West Virginia, Colorado, Florida, Iowa, Mississippi, Illinois, Indiana and Missouri, featureapproximately 28,000 slot machines and video lottery terminals, approximately 750 table games and approximately 12,600 hotel rooms. ERI’s primary source of revenue is generated by gaming operations, and ERI utilizes its hotels, restaurants,bars, entertainment, racing, retail shops and other services to attract customers to its properties. ERI was founded in 1973 in Reno, Nevada as a family business by the Carano family. ERI has been publicly traded since September 22, 2014 andits common stock currently trades on NASDAQ under the symbol “ERI.”

ERI’s principal executive offices are located at 100West Liberty Street, Suite 1150, Reno, Nevada 89501 and the telephone number at that location is (775) 328-0100.

Merger Sub is a Delaware corporation and a direct wholly owned subsidiary of ERI. Merger Sub was incorporated on June 20, 2019 solely forthe purpose of effecting the Merger pursuant to the Merger Agreement. Merger Sub has not carried on any activities other than in connection with the Merger.

Additional information about ERI and its subsidiaries is included in the ERI documents incorporated by reference into this joint proxystatement/prospectus. Please refer to “Where You Can Find More Information” beginning on page 270.

Caesars

Caesars is primarily a holding company with no independent operations of its own. Caesars operates its business primarily through its whollyowned subsidiaries CEOC LLC and CRC. Caesars operates a total of fifty-four properties in fourteen U.S. states and five countries outside of the United States, including fifty casino properties. Nine casinos are in Las Vegas, which represented 45%of net revenues for the six months ended June 30, 2019.

Caesars began operations in 1937 and its common stock currently trades onNASDAQ under the symbol “CZR.”

Caesars’ principal executive offices are located at One Caesars Palace Drive, Las Vegas,Nevada 89109 and the telephone number at that location is (702) 407-6000.

Additional informationabout Caesars and Caesars’ subsidiaries is included in the Caesars documents incorporated by reference into this joint proxy statement/prospectus. Please refer to “Where You Can Find More Information” beginning onpage 270.

Material Contracts Between ERI and Caesars

On April 15, 2018, ERI entered into a definitive agreement to acquire Tropicana Entertainment, Inc., an entity that was at that timeaffiliated with the Caesars Significant Stockholder, in a cash transaction valued at $1.9 billion. The transaction was consummated on October 1, 2018. At the closing of such transaction, a subsidiary of ERI merged into TropicanaEntertainment, Inc. and Tropicana Entertainment, Inc. became a wholly owned subsidiary of ERI.

Except as set forth in this joint proxystatement/prospectus and related to the Merger Agreement or the Merger or contemplated by the Merger Agreement, neither ERI nor any of ERI’s affiliates, including Merger Sub, has any past, present or proposed material contracts, arrangements,understandings, relationships, negotiations or transactions with Caesars or Caesars’ affiliates since January 1, 2016, including with respect to: (a) a merger, consolidation or acquisition; (b) a tender offer or other acquisitionof securities; (c) an election of directors; or (d) a sale or other transfer of a material amount of assets.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF ERI

The following table sets forth selected historical consolidated financial information for ERI and its subsidiaries as of and for thefiscal years ended December 31, 2018, 2017, 2016, 2015 and 2014 and for the six months ended June 30, 2019 and 2018. The statement of operations data for each of the three fiscal years ended December 31, 2018, 2017 and 2016, andbalance sheet data as of December 31, 2018 and 2017 have been obtained from ERI’s audited consolidated financial statements contained in its Annual Report on Form 10-K for the fiscal year endedDecember 31, 2018, which is incorporated by reference into this joint proxy statement/prospectus. Financial statements not incorporated by reference into this joint proxy statement/prospectus include (i) statement of operations data for thefiscal year ended December 31, 2015 and balance sheet data as of December 31, 2016, which have been obtained from audited consolidated financial statements included in Exhibit 99.1 of ERI’s Current Report on Form 8-K filed on September 6,2018 recasting information presented in certain sections of the Annual Report on Form 10-K for the fiscal year ended December 31, 2017 for the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts withCustomers (Topic 606), (ii) balance sheet data as of December 31, 2015 obtained from consolidated financial statements which were recast for the adoption of ASU 2014-09, and (iii) statement of operations data for the fiscal year endedDecember 31, 2014 and balance sheet data as of December 31, 2014 obtained from consolidated financial statements which were not recast for the adoption of ASU 2014-09. ERI’s statement of operations data for the six months ended June 30, 2019and 2018 and the balance sheet data as of June 30, 2019 have been obtained from ERI’s unaudited consolidated financial statements included in its Quarterly Report on Form 10-Q for the six months ended June 30, 2019, which is incorporated byreference into this joint proxy statement/prospectus. In 2019, ERI adopted ASU 2016-02, Leases (Topic 842), and all related amendments. In the opinion of ERI’s management, the unaudited consolidated financial data include alladjustments, consisting of only normal recurring adjustments, considered necessary for a fair statement of the financial positions and the results of operations for these periods.

The information set forth below should be read in conjunction with ERI’s “Management’s Discussion and Analysis of FinancialCondition and Results of Operations” included in ERI’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and included in ERI’s Quarterly Report on Form 10-Q for the six months ended June 30, 2019, which are incorporated by reference into this joint proxy statement/prospectus. For additional information on documents incorporated by reference into this jointproxy statement/prospectus, see “Where You Can Find More Information” beginning on page 270.

 

  Six months ended
June 30,
  Year ended December 31, 
 2019  2018  2018(1)   2017(2)   2016  2015(3)   2014(4)  
  (unaudited)                
  (dollars in thousands, except operating data) 

Consolidated Statement of Operations Data:

       

Revenues:

       

Casino and pari-mutuel commissions

 $927,848  $692,248  $1,553,391  $1,099,027  $600,015  $551,600  $300,834 

Food and beverage

  150,637   106,491   247,332   198,246   155,217   102,821   68,233 

Hotel

  143,175   69,667   183,798   133,338   100,462   43,894   28,007 

Other

  51,284   28,588   71,486   50,187   44,771   26,030   13,198 

Less promotional allowances

  —     —     —     —     —     —     (48,449
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net revenues

  1,272,944   896,994   2,056,007   1,480,798   900,465   724,345   361,823 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Expenses:

       

Casino and pari-mutuel commissions

  413,546   339,496   749,289   561,089   352,220   330,589   170,203 

Food and beverage

  119,882   89,546   202,618   169,848   122,598   84,567   37,411 

Hotel

  48,786   26,201   65,009   50,575   41,212   17,993   8,536 

 

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  Six months ended
June 30,
  Year ended December 31, 
 2019  2018  2018(1)   2017(2)   2016  2015(3)   2014(4)  
  (unaudited)                
  (dollars in thousands, except operating data) 

Other

  21,972   15,715   38,676   32,156   30,776   17,475   9,348 

Marketing and promotions

  64,381   43,133   106,161   83,174   40,890   31,356   21,982 

General and administrative

  237,319   147,947   349,598   241,037   130,720   97,356   58,738 

Corporate

  37,805   23,801   46,632   30,739   19,880   16,469   4,617 

Impairment charges

  958   9,815   13,602   38,016   —     —     —   

Depreciation and amortization

  114,290   63,444   157,429   105,891   63,449   56,921   28,643 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating expenses

  1,058,939   759,098   1,729,014   1,312,525   801,745   652,726   339,478 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Gain (loss) on sale or disposition of property

  21,952   (283  (835  (319  (836  (6  (84

Proceeds from terminated sale

  —     —     5,000   20,000   —     —     —   

Transaction expenses

  (9,186  (5,952  (20,842  (92,777  (9,184  (2,452  (7,411

Equity in (loss) income of unconsolidated affiliates(5)

  (617  (53  (213  (367  —     3,460   2,705 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating income

  226,154   131,608   310,103   94,810   88,700   72,621   17,555 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Other income (expense):

       

Interest expense, net

  (145,308  (62,656  (171,732  (99,769  (50,917  (61,558  (30,734

Gain on valuation of unconsolidated affiliate

  —     —     —     —     —     35,582   —   

Gain on termination of supplemental executive retirement plan

  —     —     —     —     —     —     715 

Loss on early retirement of debt, net

  —     —     (162  (38,430  (155  (1,937  —   

Other non-operating expense

  (2,858  —     (2,587  —     —     —     (90
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total other expense

  (148,166  (62,656  (174,481  (138,199  (51,072  (27,913  (30,109
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss) before incometaxes(6)

  77,988   68,952   135,622   (43,389  37,628   44,708   (12,554

(Provision) benefit for income taxes

  (20,823  (11,301  (40,387  116,769   (13,101  69,538   (1,768
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss)

 $57,165  $57,651  $95,235  $73,380  $24,527  $114,246  $(14,322
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
  Six months ended
June 30,
  Year ended December 31, 
  2019  2018  2018(1)  2017(2)   2016  2015(3)   2014(4) 
  (unaudited)                
  (dollars in thousands, except operating data) 

Operating Data(7):

       

Number of hotel rooms(8)

  12,712   7,143   12,594   7,170   4,853   4,853   1,571 

Number of slot machines(8)

  26,650   21,081   29,813   21,129   9,746   10,281   8,665 

Number of table games(8)

  605   462   705   484   256   263   177 

 

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  As of June 30,  As of December 31, 
  2019  2018(1)  2017(2)  2016  2015(3)  2014(4) 
  (unaudited)                
  (dollars in thousands, except operating data) 

Cash and cash equivalents

 $183,139  $230,752  $134,596  $61,029  $78,278  $87,604 

Total assets

  6,082,002   5,911,462   3,546,472   1,294,044   1,325,008   1,171,559 

Total debt

  3,018,784   3,261,735   2,190,193   800,426   866,237   775,091 

Stockholders’ equity

  1,085,519   1,029,153   941,597   295,969   268,460   151,622 

 

(1)

On August 7, 2018, ERI completed its acquisition of the Elgin Riverboat Resort – Riverboat Casinod/b/a Grand Victoria Casino (“Elgin”) for total purchase consideration of $328.8 million. On October 1, 2018, ERI completed its acquisition of Tropicana Entertainment, Inc. (“Tropicana”) for total purchase considerationof $927.3 million.

(2)

On May 1, 2017, ERI completed its acquisition (the “Isle Acquisition”) of Isle of Capri Casinos,Inc. (“Isle”). As a result of the Isle Acquisition, Isle became a wholly owned subsidiary of ERI and, at the effective time of the Isle Acquisition, each outstanding share of Isle common stock converted into the right to receive $23.00 incash or 1.638 shares of ERI common stock, at the election of the applicable Isle shareholder and subject to proration such that the outstanding shares of Isle common stock were exchanged for aggregate consideration comprised of 58% cash, or$552.0 million, and 42% ERI common stock, or 28.5 million newly issued shares of ERI common stock. The total purchase consideration was $1.93 billion.

(3)

On November 24, 2015, ERI acquired all of the assets and properties of Circus Reno and the 50% membershipinterest in the Silver Legacy Joint Venture owned by Galleon, Inc. (the “Reno Acquisition”). The total purchase consideration was $223.6 million. Following the consummation of the Reno Acquisition, the Silver Legacy Joint Venturebecame a wholly owned indirect subsidiary of ERI.

(4)

On September 19, 2014, a wholly-owned subsidiary of ERI merged into Eldorado Holdco LLC, the parent ofEldorado Resorts LLC and MTR Gaming (the “MTR Merger”). Effective upon the MTR Merger, Eldorado Holdco LLC, Eldorado Resorts LLC and MTR Gaming became wholly-owned subsidiaries of ERI.

(5)

In September 2018, ERI entered into a 25-year agreement, which becameeffective in January 2019, with William Hill PLC and William Hill US, its U.S. subsidiary (together, “William Hill”), pursuant to which ERI received a 20% ownership interest in William Hill US. Additionally, ERI receives a profit sharefrom the operations of betting and other gaming activities associated with ERI’s properties. In April 2018, ERI entered into a joint venture with Cordish Companies (“Cordish”) to master plan and develop a mixed-use entertainment and hospitality destination expected to be located on unused land adjacent to the casino and racetrack at our Pompano property. Based on ERI’s 50% variable interest in the joint venture,ERI participates evenly with Cordish in the profits and losses of the joint venture. ERI holds a 42.1% variable interest in a partnership (the “Hampton Partnership”) with other investors that developed a new118-room Hampton Inn & Suites hotel at Scioto Downs that opened in March 2017. Equity in income of unconsolidated affiliates subsequent to March 2017 represents ERI’s 42.1% variable interest inthe Hampton Partnership. Equity in income of unconsolidated affiliates prior to November 24, 2015 represents ERI’s 48.1% joint venture interest in the Silver Legacy Joint Venture.

(6)

Prior to September 19, 2014, ERI was taxed as a partnership under the Code pursuant to which income taxeswere primarily the responsibility of the partners. On September 18, 2014, as part of the MTR Merger, ERI became a C corporation subject to the federal and state corporate-level income taxes at prevailing corporate tax rates. While taxed as apartnership, ERI was not subject to federal income tax liability but made distributions to ERI’s equity holders to cover such liabilities.

(7)

Excludes the operating data of (a) the properties owned by Tropicana prior to October 1, 2018,(b) Elgin prior to August 7, 2018, (c) the properties owned by Isle prior to May 1, 2017, (d) Silver Legacy and Circus Reno prior to November 24, 2015, and (e) the properties owned by MTR Gaming prior toSeptember 19, 2014, for each period presented.

(8)

As of the end of each period presented. Total table games does not include poker games, and total slot machinesincludes video lottery terminals and e-tables.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OFCAESARS

The following table sets forth selected historical consolidated financial information for Caesars and Caesars’subsidiaries as of and for the fiscal years ended December 31, 2018, 2017, 2016, 2015 and 2014 and for the six months ended June 30, 2019 and 2018. The statement of operations data for each of the three fiscal years ended December 31,2018, 2017 and 2016, and balance sheet data as of December 31, 2018 and 2017 have been obtained from Caesars’ audited consolidated financial statements contained in its Annual Report on Form 10-K forthe fiscal year ended December 31, 2018, which is incorporated by reference into this joint proxy statement/prospectus. Financial statements not incorporated by reference into this joint proxy statement/prospectus include (i) statement ofoperations data for the fiscal year ended December 31, 2015 and balance sheet data as of December 31, 2016, which have been obtained from audited consolidated financial statements included in Exhibit 99.1 of Caesars’ Current Report on Form 8-Kfiled on June 1, 2018 recasting information presented in certain sections of the Annual Report on Form 10-K for the fiscal year ended December 31, 2017 for the adoption of ASU 2014-09, Revenue from Contracts with Customers, (ii) balance sheetdata as of December 31, 2015 obtained from consolidated financial statements which were recast for the adoption of ASU 2014-09, and (iii) statement of operations data for the fiscal year ended December 31, 2014 and balance sheet data as of December31, 2014 obtained from consolidated financial statements which were not recast for the adoption of ASU 2014-09. The statement of operations data for the six months ended June 30, 2019 and 2018 and the balance sheet data as of June 30, 2019have been obtained from Caesars’ unaudited consolidated financial statements included in its Quarterly Report on Form 10-Q for the six months ended June 30, 2019, which is incorporated by referenceinto this joint proxy statement/prospectus. In the opinion of Caesars’ management, the unaudited consolidated financial data include all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair statement ofthe financial positions and the results of operations for these periods.

The information set forth below should be read in conjunctionwith Caesars’ “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Caesars’ Annual Report on Form 10-K for the fiscal year endedDecember 31, 2018, and included in Caesars’ Quarterly Report on Form 10-Q for the six months ended June 30, 2019, which are incorporated by reference into this joint proxystatement/prospectus. For additional information on documents incorporated by reference into this joint proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 270.

 

  Six months ended
June 30,
  Year ended December 31, 
  2019  2018  2018  2017(2)  2016  2015(3)  2014(4) 
  

(unaudited)

              (unaudited) 

OPERATING DATA

  (dollars in millions, except per share data) 

Net revenues

 $4,337  $4,091  $8,391  $4,868  $3,877  $3,957  $7,967 

Impairment of goodwill

  —     —     43   —     —     —     695 

Impairment of tangible and other intangible assets

  50   —     35   —     —     —     299 

Income/(loss) from operations

  509   407   739   537   226   318   (580

Interest expense

  (692  (664  (1,346  (773  (599  (683  (2,669

Gain on deconsolidation of subsidiaries

  —     —     —     31   —     7,125   —   

Restructuring and support expenses

  —     —     —     (2,028  (5,729  (1,017  —   

Loss on extinguishment of debt

  —     —     (1  (232  —     —     (96

Other income/(loss)

  (439  229   791   95   (29  7   1 

Income/(loss) from continuing operations, net of income taxes

  (533  (5  304   (375  (6,458  5,856   (2,995

Discontinued operations, net of incometaxes(5)

  —     —     —     —     3,380   155   (143

Net income/(loss)

  (533  (5  304   (375  (3,078  6,011   (3,138

Net income/(loss) attributable to Caesars

  (532  (5  303   (368  (3,049  6,012   (2,941

 

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  Six months ended
June 30,
  Year ended December 31, 
  2019  2018  2018  2017(2)  2016  2015(3)  2014(4) 
  

(unaudited)

              (unaudited) 

COMMON STOCK DATA

  (dollars in millions, except per share data) 

Basic earnings/(loss) per share from:

       

Continuing operations

 $(0.79 $(0.01 $0.44  $(1.32 $(43.96 $40.44  $(19.64

Discontinued operations(5)

  —     —     —     —     23.11   1.07   (1.00
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income/(loss)

 $(0.79 $(0.01 $0.44  $(1.32 $(20.85 $41.51  $(20.64
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Diluted earnings/(loss) per share from:

       

Continuing operations

 $(0.79 $(0.01 $0.41  $(1.32 $(43.96 $39.83  $(19.64

Discontinued operations(5)

  —     —     —     —     23.11   1.06   (1.00
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income/(loss)

 $(0.79 $(0.01 $0.41  $(1.32 $(20.85 $40.89  $(20.64
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

  As of June 30,  As of December 31, 
          2019(1)          2018  2017(2)  2016  2015(3)  2014(4) 
  

(unaudited)

           (unaudited) 

FINANCIAL POSITION DATA

  (dollars in millions) 

Total assets

 $26,136  $25,775  $25,436  $14,936  $12,251  $23,368 

Current portion of long-term debt

  64   164   64   89   187   15,779 

Long-term debt

  8,776   8,801   8,849   6,749   6,777   7,230 

Current portion of financingobligations(6)

  22   20   9   —     —     —   

Financing obligations(6)

  10,017   10,057   9,355   —     —     —   

Noncontrolling interests(7)

  83   88   71   53   80   (809

Stockholders’ equity/(deficit)

  2,725   3,250   3,226   (1,660  1,962   (4,140

 

(1)

In 2019, Caesars adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic842), and all related amendments.

(2)

2017 reflects the consolidation of Caesars Entertainment Operating Company, Inc.’s (“CEOC”)successor operating company subsequent to October 6, 2017 upon CEOC’s and certain of its U.S. subsidiaries’ (collectively, the “Debtors”) emergence from bankruptcy.

(3)

2015 reflects the deconsolidation of CEOC as of January 15, 2015 when the Debtors voluntarily filedfor reorganization.

(4)

2014 financial information has not been recast for Caesars’ adoption of ASU 2014-09, Revenue fromContracts with Customers, and therefore, is not comparable to the 2015 through June 30, 2019 financial information.

(5)

2016 reflects the discontinued operations classification of Caesars Interactive Entertainment’s social andmobile games business (the “SMG Business”) effective beginning in the third quarter of 2016 as a result of the sale of the SMG Business on September 23, 2016.

(6)

Includes leases of certain real property assets from VICI and/or its subsidiaries.

(7)

The decrease in 2014 was primarily due to the sale and grant of CEOC shares in May 2014, which reducedCaesars’ ownership to approximately 89%.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The unaudited pro forma condensed combined financial information (“Unaudited Pro Forma Financial Statements”) includedherein present the unaudited pro forma condensed combined balance sheet (“Unaudited Pro Forma Balance Sheet”) and the unaudited pro forma condensed combined statements of operations (“Unaudited Pro Forma Statement of Operations”)based upon the combined audited and unaudited historical financial statements of ERI, Caesars, Tropicana (acquisition consummated October 1, 2018) and Elgin (acquisition consummated August 7, 2018), after giving effect to the Merger, theTropicana Acquisition (as defined below), the Elgin Acquisition (as defined below), the GLPI Master Lease (consummated October 1, 2018), the VICI Master Transaction (as defined below), ERI Financing Transactions (as defined below), ERIDispositions (as defined below) (together the “Combined Transactions”), and the adjustments described in the accompanying notes.

Basisfor Historical Information

The Unaudited Pro Forma Financial Statements have been prepared by management for illustrative purposesonly and do not purport to represent what the results of operations, balance sheet data or other financial information of ERI would have been if the Combined Transactions had occurred as of the dates indicated or what such results will be for anyfuture periods. The pro forma adjustments are based on the preliminary assumptions and information available at the time of the preparation of this report. The historical financial information has been adjusted to give effect to pro forma eventsthat are: (1) directly attributable to the Combined Transactions, (2) factually supportable, and (3) with respect to the Unaudited Pro Forma Statement of Operations, expected to have a continuing impact on the combined results of ERI.As such, the Unaudited Pro Forma Statement of Operations for the six months ended June 30, 2019 and for the year ended December 31, 2018 do not reflect non-recurring charges that will be incurred inconnection with the Combined Transactions. The Unaudited Pro Forma Statement of Operations also do not reflect any potential divestitures that may occur prior to, or subsequent to, the consummation of the Merger (other than those expressly describedabove), cost savings from potential operating efficiencies or associated costs to achieve such savings or synergies that are expected to result from the Combined Transactions, nor does it include any costs associated with restructuring orintegration activities resulting from the Combined Transactions, as they are currently not known, and, to the extent they arise, they are expected to be non-recurring and will not have been incurred at theclosing date of the Combined Transactions. However, such costs could affect the combined company following the Combined Transactions in the period the costs are incurred. Further, the Unaudited Pro Forma Financial Statements do not reflect theeffect of any regulatory actions that may impact the results of the combined company following the Combined Transactions.

Acquisitions

The Merger

On June 24, 2019, ERIentered into the Merger Agreement with Caesars and Merger Sub pursuant to which Merger Sub will merge with and into Caesars, with Caesars continuing as the surviving corporation and a direct wholly owned subsidiary of ERI. Based on the terms andsubject to the conditions set forth in the Merger Agreement, the aggregate consideration payable by ERI in respect of outstanding shares of common stock of Caesars will be (a) an amount of cash equal to (i) the sum of (A) $8.40 plus(B) if applicable closing conditions set forth in the Merger Agreement are not satisfied by March 25, 2020, an amount equal to $0.003333 for each day (provided that such amount will not be payable if the waiting period under the HSR Acthas expired or been terminated but (to the extent required) the consents of the holders of Caesars’ 5.00% convertible senior notes due 2024 have not been obtained) from March 25, 2020 until the Closing Date, multiplied by (ii) theAggregate Caesars Share Amount and (b) a number of shares of common stock of ERI equal to the Aggregate ERI Share Amount. Following the consummation of the Merger, it is expected that ERI stockholders, on the one hand, and former Caesarsstockholders and holders of Caesars convertible notes (assuming that all Caesars convertible

 

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notes are converted immediately following consummation of the Merger into $8.40 in cash and 0.0899 shares of ERI common stock for each share of Caesars common stock into which such Caesarsconvertible notes were convertible immediately prior to the Merger), on the other hand, will hold approximately 51% and 49%, respectively, of the company’s outstanding shares of common stock. Based on the terms of the indenture governing theCaesars convertible notes (see “Note 2—Calculation of Purchase Consideration” under “Unaudited Pro Forma Condensed Combined Financial Statements”), the mix of cash and ERI common stock payable upon conversion of theCaesars convertible notes will likely differ from the assumed amounts.

Pursuant to the Merger Agreement, the outstanding equity awards ofCaesars will generally be treated as follows:

Stock options: Each Vested Caesars Stock Option that has a per share exercise priceless than the Cash Election Consideration will, as of the Effective Time, be converted into the right to receive an amount in cash equal to the product of (a) the number of “net shares” of Caesars common stock applicable to suchVested Caesars Stock Option (after taking into account the exercise price applicable to such option) and (b) the Cash Election Consideration and will be cancelled as of the Effective Time.

Performance-based stock options are expected to be cancelled in connection with the consummation of the Merger.

Each Continuing Caesars Stock Option will (a) cease to represent an option or right to acquire shares of Caesars common stock and(b) be converted into an option or right to purchase shares of ERI common stock on the same terms and conditions as were applicable to such option immediately prior to the Effective Time. The number of shares, the exercise price per share ofERI common stock, and any other rights of a holder of a converted Continuing Caesars Stock Option will be determined based on a formula set forth in the Merger Agreement intended to preserve the intrinsic value of each Continuing Caesars StockOption.

Performance Based Units: Each Caesars EBITDA PSU will, as of the Effective Time, be converted into the right to receivethe Cash Election Consideration. The number of Caesars EBITDA PSUs will be based on actual performance achieved (measured through the end of the month immediately prior to the Effective Time, as proportionately extrapolated through the remainder ofthe applicable performance period), with respect to Caesars EBITDA PSUs that are eligible to vest in respect of the year in which the Closing occurs, and will be based on target level achievement with respect to Caesars EBITDA PSUs eligible to vestin respect of full performance periods commencing after the Closing Date.

Restricted Stock Units (“RSU”) and Market-BasedPerformance Stock Units (“PSU”): Each (1) Caesars Time-Based RSU and (2) each Caesars Market-Based PSU will, as of the Effective Time, (a) be converted into a number of time-based restricted stock units or market-basedperformance stock units, as applicable, in respect of shares of ERI common stock in an amount equal to a number of shares of ERI common stock equal to (i) the Per Share Amount divided by (ii) the ERI Common Stock volume weighted averageprice (“VWAP”) (with aggregated fractional shares rounded to the nearest whole share), and (b) remain subject to the same terms and conditions as were applicable to such Caesars Time-Based RSU and Caesars Market-Based PSU immediatelyprior to the Effective Time. The stock or market-based goals applicable to the Caesars Market-Based PSUs that convert into market-based performance stock units in respect of shares of ERI will be adjusted accordingly.

The Tropicana Acquisition

OnOctober 1, 2018, ERI completed its acquisition of Tropicana (the “Tropicana Acquisition”) in a cash transaction valued at $1,900 million. Immediately prior to such merger, Tropicana sold Tropicana Aruba Resort and Casino andGaming and Leisure Properties, Inc. (“GLPI”) acquired substantially all of Tropicana’s real estate, other than the real estate underlying MontBleu Casino Resort & Spa (“MontBleu”) and Lumière Place Casino(“Lumière”), for approximately $964 million and ERI acquired Tropicana’s operations and certain real

 

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estate for $927 million. Substantially concurrently with the acquisition of the real estate portfolio by GLPI, ERI also entered into a triple net master lease with GLPI (the “GLPIMaster Lease”). ERI funded the purchase of the real estate underlying Lumière with the proceeds of a $246 million loan and funded the remaining consideration payable with cash on hand at ERI and Tropicana, borrowings underERI’s revolving credit facility and proceeds from ERI’s offering of $600 million in aggregate principal amount of 6% senior notes due 2026.

The Elgin Acquisition

On August 7,2018, ERI completed its acquisition of Elgin (the “Elgin Acquisition” and together with the Merger and the Tropicana Acquisition, the “Acquisitions”). ERI purchased Elgin for $328 million plus a $1 million workingcapital adjustment. The Elgin Acquisition was financed using cash on hand and borrowings under ERI’s revolving credit facility.

VICI MasterTransaction

In connection with the execution of the Merger Agreement, on June 24, 2019, ERI entered into the MasterTransaction Agreement with VICI (the “VICI Master Transaction”), pursuant to which, among other things, ERI has agreed, subject to the consummation of the Merger and the other applicable conditions set forth therein and in any relateddocuments, (i) through one or more of its subsidiaries (after giving effect to the Merger) to consummate one or more sale and leaseback transactions with VICI and/or its affiliates with respect to certain property described in the MasterTransaction Agreement, including Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City (or, under certain circumstances, if necessary, certain replacement properties specified in the Master Transaction Agreement), (ii)through one or more of its subsidiaries (after giving effect to the Merger) to amend the CPLV Lease, the Non-CPLV Lease and the Joliet Lease (each as defined in the Master Transaction Agreement) in accordancewith the terms of the Master Transaction Agreement and receive certain consideration from VICI or its affiliates in respect thereof, (iii) to provide a guaranty in respect of each of the CPLV Lease, theNon-CPLV Lease and the Joliet Lease in accordance with the terms of the Master Transaction Agreement, (iv) to enter into (or cause its applicable subsidiaries (after giving effect to the Merger) to enterinto) certain right of first refusal agreements and a put-call right agreement in accordance with the terms of the Master Transaction Agreement and (v) to undertake certain related transactions inconnection with or related to the foregoing. ERI expects to apply the proceeds of the VICI transactions to pay a portion of the cash consideration payable in the Merger and transaction expenses associated with the Merger and related transactions.See Note 3(g) for a more detailed description of the VICI transactions and the cash proceeds therefrom.

GLPI Master Lease

The GLPI Master Lease entered into in conjunction with the Tropicana Acquisition on October 1, 2018 was accounted for as a financingobligation equal to the fair value of the leased real estate assets acquired in purchase accounting. The fair value of the real estate assets and the financing obligation was estimated based on the present value of the estimated future leasepayments over the lease term of 35 years, including renewal options, using an imputed discount rate of approximately 10.2%. The value of the financing obligation is dependent upon assumptions regarding the amount of the lease payments and theestimated discount rate of the lease payments required by a market participant.

The GLPI Master Lease provides for the lease of land,buildings, structures and other improvements on the land (including barges and riverboats), easements and similar appurtenances to the land and improvements relating to the operation of the leased properties. The GLPI Master Lease provides for aninitial term of fifteen years with no purchase option. At ERI’s option, the GLPI Master Lease may be extended for up to four five-year renewal terms beyond the initial 15-year term. If ERI elects to renewthe term of the GLPI Master Lease, the renewal will be effective as to all, but not less than all, of the leased property then subject to the GLPI Master Lease. ERI does not have the ability to terminate its obligations under the GLPI Master Leaseprior to its expiration without GLPI’s consent.

 

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The rent payable under the GLPI Master Lease is comprised of “base rent” and“percentage rent.” Base rent is the sum of:

 

  

Building Base Rent: a fixed component equal to $61 million during the first year of the GLPI Master Lease,and thereafter escalated annually by 2%, subject to a cap that would cause the preceding year’s adjusted revenue to rent ratio for the properties in the aggregate not to fall below 1.20:1.00 for the first five years of the GLPI Master Lease and1.80:1.00 thereafter; plus

 

  

Land Base Rent: an additional fixed component equal to $13 million, subject to adjustment in the event ofthe termination of the GLPI Master Lease with respect to any of the leased properties.

The percentage rent payableunder the GLPI Master Lease is adjusted every two years based on the actual net revenues of the leased properties during the two-year period then ended. The initial variable rent, which is fixed for the firsttwo years, is $13 million per year. The actual percentage increase is based on actual performance and is subject to change.

Theinitial annual rent under the terms of the lease is approximately $88 million.

Under the GLPI Master Lease, ERI is required to paythe following, among other things: lease payments to the underlying ground lessor for properties that are subject to ground leases, facility maintenance costs, all insurance premiums for insurance with respect to the leased properties and thebusiness conducted on the leased properties, taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor) and all utilities and other services necessary or appropriate for the leased properties and thebusiness conducted on the leased properties.

The estimated future lease payments include the minimum lease payments and were adjusted toreflect estimated lease payments as described in the agreements, including an annual escalator of up to 2%.

ERI Financing Transactions

Caesars Financing

In connection with theexecution of the Merger Agreement, on June 24, 2019, ERI entered into a debt financing commitment letter pursuant to which the lenders party thereto have committed to arrange and provide (i) ERI with: (a) a $1,000 million seniorsecured revolving credit facility, (b) a $3,000 million senior secured term loan B facility, (c) a $3,600 million senior secured 364-day bridge facility and (d) a $1,800 millionsenior unsecured bridge loan facility and (ii) a subsidiary of Caesars with a $2,400 million senior secured incremental term loan B facility (collectively, the “Debt Financing”). The proceeds of the Debt Financing may be used topay all or a portion of the cash consideration payable in the Merger, to refinance all of ERI’s existing syndicated bank credit facilities and outstanding senior notes, to refinance certain of Caesars’ and its subsidiaries’ existingdebt, to pay transaction fees and expenses related to the Merger and related transactions and for working capital and general corporate purposes. The availability of the borrowings under this debt financing is subject to the satisfaction of certaincustomary conditions including the substantially concurrent closing of the Merger. Since the terms of new debt are preliminary, ERI has assumed that the refinancing of its existing debt will be accounted for as a debt extinguishment.

Tropicana Financing

In connection withthe Tropicana Acquisition on October 1, 2018, ERI completed a debt financing transaction (the “Tropicana Financing”) comprised of $600 million aggregate principal amount of 6.0% senior unsecured notes due 2026. The proceeds ofsuch borrowings were used to pay the cash consideration payable in the Tropicana Acquisition and pay transaction fees and expenses related to the foregoing. Additionally, substantially concurrent with the consummation of the Tropicana Acquisition,ERI amended its credit facility to

 

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increase its revolving credit facility from $300 million to approximately $500 million and extend the maturity of the revolving credit facility from April 2022 to October 1, 2023,the fifth anniversary following the consummation of the Tropicana Acquisition.

Lumière Financing

ERI borrowed $246 million from GLPI (the “Lumière Loan” and together with the Debt Financing and the Tropicana Financing,the “ERI Financing Transactions”) to fund the purchase price of the real estate underlying Lumière. The Lumière Loan bears interest at a rate equal to (i) 9.09% until October 1, 2019 and (ii) 9.27% until October 1,2020, and matures on October 1, 2020. The Lumière Loan is secured by a first priority mortgage on the Lumière real property until October 1, 2019. In connection with the issuance of the Lumière Loan, ERI agreed to useits commercially reasonable efforts to transfer one or more of the Grand Victoria Casino, Isle Casino Bettendorf, Isle Casino Hotel Waterloo, Isle of Capri Lula, Lady Luck Casino Vicksburg and Mountaineer Casino, Racetrack and Resort or such otherproperty or properties mutually acceptable to us and GLPI, provided that the aggregate value of such property, individually or collectively, is at least $246 million (the “Replacement Property”), to GLPI with a simultaneous leasebackto ERI of such Replacement Property. In connection with such Replacement Property sale, ERI and GLPI will enter into an amendment to the GLPI Master Lease to revise the economic terms to include the Replacement Property, GLPI, or one of itsaffiliates, will assume the Lumière Loan and Tropicana St. Louis RE LLC’s obligations under the Lumière Loan in consideration of the acquisition of the Replacement Property and ERI’s obligations under the Lumière Loanwill be deemed to have been satisfied, the Lumière Real Property will be released from the lien placed on it in connection with the Lumière Loan (if such lien has not yet been released in accordance with the terms of the LumièreLoan) and in the event the value of the Replacement Property is greater than the outstanding obligations under the Lumière Loan, GLPI will pay ERI the difference between the value of the Replacement Property and the amount of outstandingobligations under the Lumière Loan. If such Replacement Property transaction is not consummated prior to the maturity date of the Lumière Loan, other than as a result of certain failures to perform by GLPI, then the amounts outstandingunder the Lumiere Loan are required to be paid in full on the maturity date thereof and the rent under the GLPI Master Lease will automatically increase, subject to certain escalations.

ERI Dispositions

Twin River WorldwideHoldings, Inc.

On July 10, 2019, ERI entered into definitive agreements to sell the equity interests of Rainbow Casino VicksburgPartnership, L.P. and IOC-Kansas City, L.L.C., the entities that hold Isle of Capri Casino Kansas City and Lady Luck Casino Vicksburg, to Twin River Worldwide Holdings, Inc. (the “Twin River Sale”)for approximately $230 million, subject to a working capital adjustment.

The definitive agreement provides that the consummation ofthe sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals. The transaction is expected to close in early 2020.

Century Casinos, Inc. and VICI Properties, Inc.

On June 17, 2019, ERI entered into definitive agreements to sell the real property relating to Mountaineer, Cape Girardeau, andCaruthersville to VICI for approximately $278 million and, immediately following the consummation of the sale such real property, sell all of the outstanding equity interests of Mountaineer Park, Inc.,IOC-Caruthersville, LLC and IOC-Cape Girardeau, LLC to Century Casinos, Inc. (the “Century Sale”) for approximately $107 million, subject to a workingcapital adjustment.

The definitive agreement provides that the consummation of the sale is subject to satisfaction of customaryconditions, including receipt of required regulatory approvals. The transaction is expected to close in early 2020.

 

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Churchill Downs Incorporated

On February 28, 2018, ERI entered into definitive agreements to sell substantially all of the assets and liabilities of Presque Isle Downsto Churchill Downs Incorporated (“CDI”). Under the terms of the agreements, CDI agreed to purchase Presque Isle Downs for approximately $179 million (the “Presque Isle Downs Sale”).

On August 10, 2018, ERI entered into a definitive agreement to sell substantially all of the assets and liabilities of Lady Luck CasinoNemacolin (“Nemacolin”) to CDI (the “Nemacolin Sale” and together with the Twin River Sale, the Century Sale and the Presque Isle Downs Sale, the “ERI Dispositions”). Under the terms of the agreement, CDI agreed topurchase Nemacolin for approximately $100,000, subject to a customary working capital adjustment. As a result of the agreement to sell Nemacolin, an impairment charge of $4 million was recorded in the third quarter of 2018 due to the carryingvalue of the net property and equipment being sold exceeding the estimated net sales proceeds.

The Presque Isle Downs Sale closed onJanuary 11, 2019 resulting in a gain on sale of $22 million, net of final working capital adjustments, for the six months ended June 30, 2019. The sale of Nemacolin closed on March 8, 2019 resulting in a gain on sale of $100,000,net of final working capital adjustments, for the six months ended June 30, 2019.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF JUNE 30, 2019

(Dollars in Millions)

 

  Historical  Pro Forma          
  As of June 30,
2019
  As of June 30,
2019
        As of June 30,
2019
 
  ERI  Caesars  ERI Dispositions
(Note 3(n))
  Reclassification
Adjustments
(Note 4)
  Pro Forma
Adjustments
(Note 3)
  Pro Forma
Combined
 

ASSETS

      

CURRENT ASSETS:

      

Cash and cash equivalents

 $ 183  $ 1,520  $ 527  $—    $(1,572) (a)  $ 658 

Restricted cash and investments

  25   120   —     —     —     145 

Marketable securities

  23   —     —     —     —     23 

Accounts receivable, net

  60   476   (1  (22  —     513 

Due from affiliates

  3   4   —     —     —     7 

Inventories

  19   36   —     —     —     55 

Income taxes receivable

  —     —     —     22   —     22 

Prepayments and other current assets

  40   247   (1  (70  —     216 

Assets held for sale

  350   —     (350  53   —     53 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total current assets

  703   2,403   175   (17  (1,572  1,692 

Investment in and advances to unconsolidated affiliates

  131   —     —     28   —     159 

Property and equipment, net

  2,714   15,892   (69  —     (853) (b),(g)   17,684 

Gaming licenses and other intangibles, net

  1,219   2,880   (93  —     2,153 (c)   6,159 

Goodwill

  967   4,039   (48  —     1,808 (d)   6,766 

Other assets, net

  347   851   (45  50   838 (e),(g),(h)   2,041 

Restricted cash

  —     61   —     (61  —     —   

Deferred income taxes

  —     10   —     —     —     10 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total assets

 $6,081  $26,136  $(80 $ —    $ 2,374  $34,511 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

      

CURRENT LIABILITIES:

      

Current portion of long-term debt

 $ —    $ 64  $ —    $ —    $ 39 (e)  $103 

Accounts payable

  56   416   —     —     —     472 

Accrued property, gaming and other taxes

  50   —     (1  177   —     226 

Accrued payroll and related

  75   —     (1  426   —     500 

Accrued interest

  39   100   —     —     (52) (e)   87 

Income tax payable

  18   —     —     1   —     19 

Accrued other liabilities

  131   1,309   (4  (542  (139) (f),(h),(i)   755 

Contract liabilities

  —     184   —     —     —     184 

Current portion of financing obligations

  —     22   —     —     3 (g)   25 

Liabilities related to assets held for sale

  14   —     (14  7   —     7 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total current liabilities

  383   2,095   (20  69   (149  2,378 

Long-term financing obligations

  965   10,017   —     —     (34) (g)   10,948 

Long-term debt, less current portion

  3,018   8,776   —     —     1,695 (e)   13,489 

Deferred income taxes

  192   621   —     —     800 (j)   1,613 

Other long-term liabilities

  437   1,819   (38  (69  21 (e),(g)   2,170 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total liabilities

  4,995   23,328   (58  —     2,333   30,598 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

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  Historical  Pro Forma          
  As of June 30,
2019
  As of June 30,
2019
        As of June 30,
2019
 
  ERI  Caesars  ERI Dispositions
(Note 3(n))
  Reclassification
Adjustments
(Note 4)
  Pro Forma
Adjustments
(Note 3)
  Pro Forma
Combined
 

COMMITMENTS AND CONTINGENCIES

      

STOCKHOLDERS’ EQUITY:

      

Common stock

  —     7   —     —     (7) (k)   —   

Paid-in capital

  752   14,196   —     —     (14,196) (k)   3,902 
      3,150 (l)  

Retained earnings (accumulated deficit)

  343   (10,904  (22  —     10,520 (m)   (63

Treasury stock

  (9  (497  —     —     497 (k)   (9

Accumulated other comprehensive loss

  —     (77  —     —     77 (k)   —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total stockholders’ equity

  1,086   2,725   (22  —     41   3,830 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Noncontrolling interests

  —     83   —     —     —     83 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total liabilities and stockholders’ equity

 $6,081  $ 26,136  $(80 $ —    $ 2,374  $34,511 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE

YEAR ENDED DECEMBER 31, 2018

(Dollars in Millions, Except Share and Per Share Data)

 

  Pro Forma  Historical  Pro Forma          
  Fiscal Year Ended
December 31, 2018
  Twelve Months
Ended
December 31,

2018
  Twelve Months
Ended
December 31,

2018
  Reclassification
Adjustments
(Note 4)
  Pro Forma
Adjustments
(Note 3)
  Fiscal Year
Ended
December 31,

2018
 
  ERI
(Adjusted for acquisition of
Tropicana and Elgin and
disposition of PID and
Nemacolin) (Note 3(r))
  Caesars  ERI
Dispositions
(Note 3(n))
  Pro Forma
Combined
 

REVENUES:

      

Casino

 $ 1,905  $ 4,247  $(268 $ 12  $ —    $ 5,896 

Pari-mutuel commissions

  15   —     (3  (12  —     —   

Food and beverage

  331   1,574   (20  (5  —     1,880 

Hotel

  303   1,519   (9  —     —     1,813 

Other

  103   789   (7  5   —     890 

Management fees

  —     60   —     —     —     60 

Reimbursed management costs

  —     202   —     —     —     202 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net revenues

  2,657   8,391   (307  —     —     10,741 

EXPENSES:

      

Casino

  856   2,393   (135  74   —     3,188 

Pari-mutuel commissions

  14   —     (3  (11  —     —   

Food and beverage

  262   1,106   (17  (7  —     1,344 

Hotel

  107   480   (4  —     —     583 

Other

  49   155   (2  (92  —     110 

Marketing and promotions

  169   —     (16  (114  —     39 

General and administrative

  491   —     (52  (439  —     —   

Corporate

  66   332   —     —     31 (o)   429 

Impairment charges

  11   —     (10  79   —     80 

Depreciation and amortization

  219   1,145   (25  —     (178) (b),(c)   1,161 

Property, general administrative, and other

  —     1,761   —     537   99 (g),(h),(o)   2,397 

Reimbursable management costs

  —     202   —     —     —     202 

Impairment of goodwill

  —     43   —     (43  —     —   

Impairment of tangible and other intangible assets

  —     35   —     (35  —     —   

Real estate tax settlement

  (1  —     —     —     —     (1
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total operating expenses

  2,243   7,652   (264  (51  (48  9,532 

Gain (loss) on sale of disposal of property and equipment

  (1  —     1   (18  —     (18

Proceeds from terminated sale

  5   —     —     —     —     5 

Transaction expenses

  (21  —     —     (38  —     (59
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating income (loss)

  397   739   (42  (5  48   1,137 

 

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  Pro Forma  Historical  Pro Forma          
  Fiscal Year Ended
December 31, 2018
  Twelve Months
Ended
December 31,

2018
  Twelve Months
Ended
December 31,

2018
  Reclassification
Adjustments
(Note 4)
  Pro Forma
Adjustments
(Note 3)
  Fiscal Year
Ended
December 31,

2018
 
  ERI
(Adjusted for acquisition of
Tropicana and Elgin and
disposition of PID and
Nemacolin) (Note 3(r))
  Caesars  ERI
Dispositions
(Note 3(n))
  Pro Forma
Combined
 

OTHER INCOME (EXPENSE):

      

Interest expense, net

  (292  (1,346  —     25   (355) (e)   (1,968

Loss on early retirement of debt, net

  (1  (1  —     —     —     (2

Unrealized loss on restricted investment

  (3  —     —     —     —     (3

Other income (loss)

  —     791   —     (20  (697) (e)   74 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total other expense

  (296  (556  —     5   (1,052  (1,899
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

NET INCOME (LOSS) BEFORE INCOME TAXES

  101   183   (42  —     (1,004  (762

(Provision) benefit for income taxes

  (35  121   9   —     227 (q)   322 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss)

  66   304   (33  —     (777  (440

Net income attributable to noncontrolling interests

  —     (1  —     —     —     (1
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss) attributable to ERI/Caesars

 $ 66  $ 303  $(33 $ —    $(777 $(441
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss) per share of Common Stock:

      

Basic

 $ 1.23      $(2.87) (s) 

Diluted

 $ 1.22      $(2.87) (s) 

Weighted Average Basic Shares Outstanding

  77,458,902       153,686,222 (s) 

Weighted Average Diluted Shares Outstanding

  78,282,101       153,686,222 (s) 

 

79


Table of Contents

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE

SIX MONTHS ENDED JUNE 30, 2019

(Dollars in Millions, Except Share and Per Share Data)

 

  Historical             
  Six Months Ended
June 30, 2019
           Six Months Ended
June 30, 2019
 
  Eldorado Resorts Inc
(adjusted for
disposition of PID and

Nemacolin (Note 3(r))
  Caesars  ERI
Dispositions
(Note 3(n))
  Reclassification
Adjustments
(Note 4)
  Pro Forma
Adjustments
(Note 3)
  Pro Forma
Combined
 

REVENUES:

      

Casino and pari-mutuel commissions

 $ 921  $ 2,209  $(135 $ —    $ —    $ 2,995 

Food and beverage

  151   805   (9  (3  —     944 

Hotel

  143   793   (5  —     —     931 

Other

  51   394   (4  3   —     444 

Management fees

  —     30   —     —     —     30 

Reimbursed management costs

  —     106   —     —     —     106 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net revenues

  1,266   4,337   (153  —     —     5,450 

EXPENSES:

      

Casino and pari-mutuel commissions

  409   1,251   (68  37   —     1,629 

Food and beverage

  120   550   (8  (4  —     658 

Hotel

  49   239   (1  —     —     287 

Other

  22   53   (1  (51  —     23 

Marketing and promotions

  64   —     (6  (58  —     —   

General and administrative

  236   —     (25  (211  —     —   

Corporate

  38   164   —     —     12 (o)   214 

Impairment charges

  1   —     —     50   —     51 

Depreciation and amortization

  114   488   (12  —     126 (b),(c)   716 

Property, general, administrative, and other

  —     927   —     256   48 (h),(g),(o)   1,231 

Reimbursable management costs

  —     106   —     —     —     106 

Impairment of tangible and other intangible assets

  —     50   —     (50  —     —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total operating expenses

  1,053   3,828   (121  (31  186   4,915 

Gain (loss) on sale of disposal of property and equipment

  22   —     —     (4  —     18 

Transaction expenses

  (9  —     —     (26  20 (p)   (15

Income (loss) of unconsolidated affiliates

  (1  —     —     (1  —     (2
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

OPERATING INCOME

  225   509   (32  —     (166  536 

OTHER INCOME (EXPENSE):