Caesars Take-Private: Change of Control Under the Indentures

Fertitta Entertainment's $17.6bn take-private of Caesars may not trigger a Change of Control under the bond indentures. The merger agreement reveals a carefully structured acquisition vehicle, Fertitta Gaming Holdco, LLC, that appears designed to satisfy the "Permitted Holder" carve-out in the CoC definition.

The Permitted Holder definition has a carveout for a minority takeout transaction The Permitted Holder definition has a carveout structured to allow a management take-private transaction.

CZR has ~$ 6.0bn of Permitted Indebtedness Capacity. Caesars has meaningful first lien capacity under the Credit Facilities (Section 4.03(b)(i)) baskets of each surviving indenture. The Company could meaningfully increase PF net leverage from 6.8x to 7.9x, or higher at the holdco level.

On May 28, 2026, Caesars Entertainment (CZR) announced a definitive agreement to be acquired by Fertitta Entertainment in an all-cash transaction valued at ~$ 17.6bn, including the assumption of ~$ 11.9bn of outstanding debt (substantially all of CZR's current debt). Caesars shareholders will receive $ 31.00 per share in cash, representing a ~49% premium to the unaffected price.

The transaction will be funded with new equity from Fertitta Entertainment, rollover equity from the Carano family, plus committed debt financing from a consortium of 10 banks.

While the exact debt and equity split has not been publicly announced, our analysis suggests that Caesars has ~$ 6.0bn of incremental debt capacity ($5,211mm First Lien and $750mm Unsecured) that can be used to finance the transaction.

All of the indentures contain substantively identical Change of Control definitions with two independent triggers:

"Change of Control" means the occurrence of any of the following:

(1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Subsidiaries taken as a whole to any Person (including any "person" (as that term is used in Section 13(d)(3) of the Exchange Act)) other than a Permitted Holder or a Related Party of a Permitted Holder; or

(2) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act (but excluding (i) any employee benefit plan of such person or its Subsidiaries, (ii) any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan and (iii) one or more Permitted Holders)) becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a "person" or "group" shall be deemed to have "beneficial ownership" of all Equity Interests that such "person" or "group" has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an "option right")), directly or indirectly, of more than 50% of the Equity Interests of the Company entitled to vote for members of the board of directors (or equivalent governing body).

Notwithstanding the preceding or any provision of Section 13d-3 of the Exchange Act, a Person or group shall be deemed not to beneficially own Equity Interests subject to a stock or asset purchase agreement, merger agreement, option agreement, warrant agreement or similar agreement (or voting or option or similar agreement related thereto) until the consummation of the acquisition of the Equity Interests in connection with the transactions contemplated by such agreement.

Prong 1 — the asset disposition trigger — carves out mergers and consolidations ("other than by way of merger or consolidation"). This is a reverse triangular merger. Prong 1 is inapplicable.

Prong 2 — the beneficial ownership trigger — is the operative question. It fires if any non-Permitted Holder person or group becomes the beneficial owner of >50% of voting equity. The pendency clause at the end means that CoC is evaluated at closing, not at signing.

The entity acquiring Caesars is Fertitta Gaming Holdco, LLC, a newly formed, single-purpose LLC. Empire Merger Sub, Inc. (a wholly owned subsidiary of Fertitta Gaming Holdco) merges into Caesars at closing. Post-merger, Fertitta Gaming Holdco's only material asset is 100% of Caesars' equity.

Separately, the merger agreement introduces Fertitta Topco, LLC, the entity into which the Rollover Stockholders contribute their Caesars shares. Exhibit A identifies the sole Rollover Stockholder: Recreational Enterprises, Inc., rolling 5,000,000 shares. Recreational Enterprises is the vehicle through which the Carano family owns its stake in Caesars as a result of their former ownership of Eldorado Resorts, which Caesars acquired.

The distinction between Fertitta Entertainment, Inc. (a diversified operating conglomerate) and Fertitta Gaming Holdco, LLC (a blank-check acquisition vehicle) is dispositive for the Permitted Holder analysis.

Post-closing, Fertitta Entertainment could merge its existing gaming portfolio (Golden Nugget and other properties) into the CZR restricted group, leveraging the no-worse-off prongs of the Permitted Indebtedness and Permitted Liens baskets to fund the contribution.

Because Fertitta Entertainment's existing credit documents are subject to NDA, we don't go into depth here — but Constellation users received a full analysis of the post-closing consolidation mechanics and the interplay between the Fertitta and CZR covenant packages.

All of the indentures define "Permitted Holders" through four clauses. The first two establish the named insiders:

"Permitted Holders" means, each of

(i) the Management Group,

(ii) the Carano Holders,

(iii) any Person that has no material assets other than the capital stock of the Company or other Permitted Holders and that, directly or indirectly, holds or acquires beneficial ownership of 100% on a fully diluted basis of the voting Equity Interests in the Company, and of which no other Person or "group" (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Issue Date), other than any of the other Permitted Holders specified in clauses (i) through (iii) above, beneficially owns more than 50% on a fully diluted basis of the voting Equity Interests thereof, and

(iv) any "group" (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Issue Date) the members of which include any of the other Permitted Holders specified in clauses (i) through (iii) above and that, directly or indirectly, hold or acquire beneficial ownership of the voting Equity Interests in the Company (a "Permitted Holder Group"), so long as

(1) each member of the Permitted Holder Group has voting rights proportional to the percentage of ownership interests held or acquired by such member and

(2) no Person or other "group" (other than the other Permitted Holders specified in clauses (i) through (iii) above) beneficially owns more than 50% on a fully diluted basis of the voting Equity Interests held by the Permitted Holder Group.

Clause (iii) is the key carve-out:

(iii) any Person that has no material assets other than the capital stock of the Company or other Permitted Holders and that, directly or indirectly, holds or acquires beneficial ownership of 100% on a fully diluted basis of the voting Equity Interests in the Company, and of which no other Person or "group" (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Issue Date), other than any of the other Permitted Holders specified in clauses (i) through (iii) above, beneficially owns more than 50% on a fully diluted basis of the voting Equity Interests thereof, and

All three conditions must be satisfied simultaneously:

Condition A: The Asset Test

No material assets other than the capital stock of the Company or other Permitted Holders.

Fertitta Gaming Holdco, LLC is a newly formed, single-purpose acquisition vehicle. Post-closing, its only material asset is 100% of Caesars' equity. This is distinct from Fertitta Entertainment, the entity that owns Golden Nugget, Landry's, 550+ restaurant outlets, the Houston Rockets, and hotel properties across the country.

Condition B: The Ownership Test

100% beneficial ownership of CZR voting equity on a fully diluted basis.

The merger converts all outstanding shares of Company Common Stock (except Rollover Shares and Parent Rollover Shares) into the right to receive $31 cash. Fertitta Gaming Holdco will own 100% of the surviving corporation's voting equity post-merger.

Condition C: The Control Test

No non-Permitted Holder beneficially owns >50% of the holdco's voting equity.

The clause asks: of Fertitta Gaming Holdco (the clean holdco), does any Person who is not a Permitted Holder under clauses (i)–(iii) beneficially own more than 50% of its voting Equity Interests?

If the transaction is not a change of control, it must therefore be true that non-Permitted Holders (in this case anyone except management and the Carano Holders) have less than 50% voting power.

The most probable structure:

Tilman Fertitta contributes the vast majority of the equity capital but receives mostly non-voting units (Class B membership interests, profit interests, or similar instruments). These carry full economic participation (distributions, capital appreciation) without voting control. Under this structure, Fertitta may hold substantially all of the economics but <50% of voting equity.

Recreational Enterprises, Inc. rolls 5,000,000 shares of CZR into Fertitta Topco. At the Topco level, that rolled equity can be structured as voting units, representing a far larger share of voting power than its proportional economic contribution.

The result: the only non-Permitted Holder of consequence (Tilman Fertitta) holds ≤50% of voting equity. The Carano Holders hold enough voting to keep Fertitta below the threshold. Condition C is satisfied.

Section 5.8 of the merger agreement is Parent's affirmative representation to Caesars:

Section 5.8 Ownership of Company Common Stock. Immediately following the Effective Time, no person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) will be the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have beneficial ownership of all equity interests that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than fifty percent (50%) of the equity interests of the Company entitled to vote for members of the board of directors (or equivalent governing body).

The language almost mirrors the beneficial ownership language in the indenture CoC definition. It tells us two things:

The structure is designed to withstand 13d look-through. The representation uses Rules 13d-3 and 13d-5, which are look-through provisions — they attribute beneficial ownership to anyone with voting or investment power, directly or indirectly. Parent is representing that even under full look-through, no person or group crosses 50%.

The voting/economic split is real, not hypothetical. If Tilman Fertitta held >50% of voting, this representation would be false.

If this analysis is correct:

Existing notes survive as-is. The existing indentures remain outstanding. There is no Change of Control Offer at 101%, and the term loan does not accelerate.

Higher pro forma leverage. The transaction is financed with an unknown amount of new bank debt (although we assume that holders who were involved in the capital markets premarketing ahead of this deal have some insight into the actual quantum).

EBITDA

We note that EBITDA, which adds back "(2) Consolidated Interest Expense" does not include the, "any interest component of the Designated Operating Leases, any Master Leases or any Gaming Lease":

"Consolidated Interest Expense" means, with respect to the Company for any period, the sum, without duplication, of:

(1) consolidated interest expense of the Company and its Restricted Subsidiaries for such period (and to the extent not included in consolidated interest expense, (x) all cash dividend payments (excluding items eliminated in consolidation) on any series of Preferred Stock or Disqualified Stock and (y) costs of surety bonds in connection with financing activities), to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, the interest component of Capitalized Lease Obligations, and net payments and receipts (if any) pursuant to, and costs Incurred in connection with, interest rate Hedging Obligations and including amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses and expensing of any bridge, commitment or other financing fees); plus

(2) consolidated capitalized interest of the Company and its Restricted Subsidiaries for such period, whether paid or accrued; plus

(3) commissions, discounts, yield and other fees and charges Incurred in connection with any Receivables Financing which are payable to Persons other than the Company and its Restricted Subsidiaries.

For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.

For the avoidance of doubt, Consolidated Interest Expense shall not include any interest component of the Designated Operating Leases, any Master Lease or any Gaming Lease.

For our purposes, we subtract $ 1,350mm from LTM reported EBITDA of $ 3,627mm for Credit Agreement EBITDA of $ 2,277mm. We note, the indentures do not have a cap for pro-forma add-backs, which could further inflate available debt capacity.

First-Lien Indebtedness

The Credit Facilities basket (Section 4.03(b)(i)) provides the primary capacity for incremental first-lien debt. The Company has previously incurred capital markets indebtedness under the Credit Facilities basket by amending the definition of "Credit Facilities" to include bond indentures:

"Section 1.4 Designation of 2027 Notes Indenture and 2027 Notes. The 2027 Notes Indenture and the 2027 Notes are hereby designated in accordance with Article I of the Indenture to be included in the definition of 'Credit Agreement.'"

The basket structures across the four indentures are:

Section 4.03(b)(i) — Credit Facilities Basket

The 7.000% SSN 2030 are the binding instrument, allowing up to $12,750 of first-lien indebtedness.

The following instruments are incurred under the Credit Facilities basket, including the Senior Secured Notes which were designated into the definition of "Credit Agreement" via supplemental indenture:

• Caesars Virginia (CVA Revolving Credit Facility and Delayed Draw Term Loan, $376mm outstanding) is assumed to be incurred under the $ 1,500mm Expansion Capital Expenditure basket (Section 4.03(b)(xxvii)).
• The existing Notes are incurred under the Issue Date Notes (Section 4.03(b)(ii)) and Issue Date Indebtedness (Section 4.03(b)(iii)) for each indenture.

Other Indebtedness

There is not meaningful other indebtedness capacity beyond the $750mm General Indebtedness basket (Section 4.03(b)(xii)). We assume other baskets are left untouched for now.

Of note, we don't include the capitalized obligation from the VICI and GLPI leases, which are accounted for as "Long-Term Financing Obligations" on the balance sheet, in the calculation of debt.

Here's what Tara, the Constellation AI assistant, surfaced about how Caesar's indentures treat Capitalized Lease Obligations:

As Tara notes, Capitalized Lease Obligations are not included in the definition of debt, leaving meaningful capacity for new indebtedness to fund the transaction.

For the purpose of this public analysis, we assume that the Company issues $2.75bn of new secured indebtedness and $750mm of new unsecured indebtedness. We could see the Company using a holdco PIK toggle financing, which has been popular in deals with less favorable permitted indebtedness capacity, to fill some of the gap given the relatively permissive Restricted Payments capacity (the indentures allow $ 4,515mm of restricted payments starter capacity).

On that basis, we see pro forma net leverage increasing from 6.8x to 7.9x and LTV increasing from 80.2% to 92.7% (including leases). Excluding the Long-Term Financing Obligations, lease-adjusted net leverage increases from 5.1x to 6.8x (Credit Agreement EBITDA of $2,277mm).