Eldorado Resorts Inc (ERI)

[Interlaken]

The "art of the deal" truly is making this exciting. For those of you that purchased this stock in March have 5X your investment. Eldorado is setting itself up to be highly leveraged both financially and operationally after buying Caesars. If the economy slows down the company could be in real trouble.

If El Dorado pulls out of the deal they pay close to $1Billion to Caesars just to walk away. When Caesars purchased "Harrahs" in 2007 was the begging of the fall of Caesars as we had the 2008 financial crisis. Now 2020 restrictions from Covid 19 will stay on the Casinos this summer and perhaps to 2021. Guarantee this is keeping people up at night that are making the decision to move forward or pass.

Between assumed debt and new debt to fund the acquisition, Eldorado expects to have about $15.5 billion of debt on its balance sheet once the Caesars deal is closed. In addition, don't forget that $1.4 billion of the financing package being used to pay for Caesars Entertainment is coming from VICI in return for a $98.5 million increase in fixed rent payments. This isn't technically debt, but it's an increased operating payment that will live on in perpetuity.

Truly enjoy seeing this play out. $15.5 billion of debt is a debt to EBITDA multiple of 7.1, which is much higher than where competitors are trading. And remember that Eldorado will have sold a vast majority of its real estate and make rent payment to VICI!

Popcorn is ready and I rooting for you El Dorado, go big or go home.