Investigation of four top executives
The Securities and Exchange Commission (SEC) recently announced it is investigating top figures within Eldorado Resorts Inc., including CEO Tom Reeg.
The probe is due to their involvement in what has been called “questionable trading activity” with the medical device manufacturer IRadimed Corp.
huge penalty costs if the investigation slows down the $17.3-billion deal
With Eldorado on the verge of a merger with Ceasars Entertainment, the company could find itself in line for huge penalty costs if the investigation slows down the $17.3-billion deal.
Board members Chairman Gary Carano, President Anthony Carano, and James Hawkins were subpoenaed along with Reeg by the SEC earlier this week. They were summoned as part of an S-4 filing, in view of the positions that the four men held in previous trading deals.
Merger of 60 casinos and resorts
The merger deal to create the largest gaming company in the United States was announced back in June. Eldorado pledged to acquire all of Caesars’ outstanding stock for $12.75 per share, as well as the company’s $8.8 billion in outstanding debt.
This would include around 60 casinos and resorts in 16 states, with all properties remaining under the well-known Caesars name.
At the time of the announcement, Reeg issued a statement indicating that
Eldorado’s combination with Caesars is a strategically, financially and operationally compelling opportunity that brings immediate and long-term value to stakeholders of both companies.”
Reeg went on to say that he hopes to complete the merger by early next year.
Possible damages
If the SEC decides to halt the merger, Eldorado could become liable for up to $836.8 million in penalties owed to Caesars.
The four executives are yet to comment, although, according to the filing, Eldorado executives have yet to be notified of any allegation of wrongdoing in connection with the investigation. However, it is known that Hawkins is on Eldorado’s compensation and audit committees, as well as featuring on IRadimed’s board.
Also reported in the filing was that, earlier this year, Caesars and Eldorado agreed to change the combined board structure in case Reeg and Gary Carano were no longer serving on the board of Eldorado.
IRadimed has been unable to comment as its offices are currently closed due to Hurricane Dorian.