Activist hedge fund secretly built stake to push Caesars sale

 

An activist hedge fund known for rattling the cages of gaming companies has quietly built a 4.9 percent stake in Caesars Entertainment, The Post has learned.

HG Vora Capital is said to be intent on forcing the company to put itself up for sale — or to sell significant assets, sources said.

The move by the hedge fund comes as a general discontent is growing among the shareholder base — with much of it aimed at the chief executive.

Shares of Caesars rose 3 percent on Wednesday, to $10.35 — but are still down nearly 17 percent this year.

Private equity firms Apollo Global Management and TPG Capital named Mark Frissora Caesars CEO in 2015, months before another group of hedge funds forced the chain into bankruptcy — taking control in the process.

Apollo and TPG in 2015 did not have an easy time finding a CEO and saw Frissora as a good cost manager, an industry source said.

However, many of the hedge funds that took control a year later had been surprised by Frissora’s selection — since he lacked gaming experience, a source with direct knowledge of their thinking said.

Frissora in 2014 stepped down as CEO of Hertz Holdings, the No. 2 rental car company, after it reported accounting errors. Shareholder activist Carl Icahn, on that occasion, helped topple the seven-year CEO.

There is a belief that a lack of firm support of Frissora by some institutional investors is keeping them from buying its shares. That lack of support is holding down the stock price, the industry source said.

Caesars shares were trading at $12.80 when it emerged from Chapter 11.

Caesars owns 20 casinos, including Bally’s, Flamingo, and the Paris in Las Vegas, and leases 19 casinos, including Caesars in Las Vegas and Atlantic City.

Frissora’s contract expires in February 2019. He earned $29 million in total compensation last year.

 

New York Post 

In July, Caesars bought Centaur Holdings, an Indiana casino, for $1.7 billion — a deal that critics said at the time was too much.

Also, Caesars has been slow to develop a strong on-line presence, the source with direct knowledge said.

“I think there is a lot that can be done, and people don’t know why it is not getting done,” the source said.

Frissora has increased Ebitda by $900 million during his tenure.

Parag Vora, who runs the hedge fund, is an ex-Goldman Sachs banker in the gaming space. The fund in recent years has invested in Penn National, which merged this year with Pinnacle Holdings. It currently owns stakes in MGM and in Caesars real estate investment trust Vici Properties.

HG Vora brass and Caesars declined to comment.