George Maloof, the owner of Palms, stated on June 21 that the casino’s management will not be changed, even though the family’s share will be cut down to 2 percent. The rest is to be shared between Leonard Green & Partners and TPG Capital.
Staying Within the Family
Maloof explained that he is to stay the chairman of Palms, and that the casino’s operations will not have to contend with a massive overhaul.
He feels that they’re now in a better position and stated, “Not having any debt is a pretty good position to be in, and we’re going to grow at the Palms and look at things that we want to do here and look at other opportunities.”
Share and share alike
Leonard Green & Partners and TPG Capital will receive a share of 49 percent each. Maloof explained that this deal will rid the casino of over $400 million of debt. However, about $20 million of debt is still linked to Palms Place, which is a condo-hotel tower.
Although the Maloof family is left with a 2 percent share, they can purchase back up to 20 percent by means of warrants and options. However, this will depend on the future development of the casino.
Despite the restructuring, Maloof is adamant that he does not feel there will be much change operationally. “I think we always want to look at ways to do things better. That’s the intent,” he added.
The application has been submitted; however, until approval will be granted by the Nevada gambling regulators, the deal is contingent.
Caesars Entertainment Corp
Caesars Entertainment Corp, which is the biggest gambling organization in the world and has nine casinos located in Las Vegas, is the main stakeholder in TPG Capital. However, the proposed leadership plan of Palms is not the same as Caesars and there has been no talk about Palms having a place in Caesars’ portfolio.
In 2010, Caesars made a deal to purchase Planet Hollywood by changing $306 million of the casino’s debt into equity, which it then purchased for $70 million as well as assuming loans of $554 million.
Caesars is renowned for its methods of attracting gamblers through Total Rewards, its loyalty program. It works by honing in on gamblers up for spending large amounts of money and tempting them with personalized offers and freebies. It then gets these gamers to play in Las Vegas by using the little casinos spread across the US.
The Palms Comparison
The Palms has not been doing too well for the last three years. This is in line with a number of other casinos located in Las Vegas. Due to the economic slowdown, many visitors have been spending less and construction projects that were given capital before the economic downfall managed to make the competition worse.
The Palms’ main focus is using nightlife and celebrities to entice visitors. It recently held the 2011 NHL Awards and on June 25, the NBA star Shaquille O’Neal’s retirement celebration.