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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
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In re:
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CAESARS ENTERTAINMENT OPERATING )
COMPANY, INC.,
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Alleged Debtor. )
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Chapter 11
Case No. 15-10047 (KG)
DECLARATION OF CHIEF EXECUTIVE OFFICER JOHN W. R. PAYNE IN
SUPPORT OF SUPPLEMENTAL OBJECTION OF CAESARS ENTERTAINMENT
OPERATING COMPANY, INC. TO MOTION AND RENEWED MOTION OF
PETITIONING CREDITORS FOR AN ORDER ESTABLISHING VENUE
______________________________________________________________________________
Pursuant to 28 U.S.C. § 1746, I, John W. R. Payne, declare:
1.
I am the Chief Executive Officer of Caesars Entertainment Operating Company,
Inc. (“CEOC”). I became CEO of CEOC in July 2014. I live and work in New Orleans,
Louisiana. For the past 19 years, I have worked in various capacities for Caesars, including as
President of Central Markets & Partnership Development for Caesars Entertainment Corporation
(“CEC” and collectively with CEC’s affiliates, “Caesars”), and as President of Enterprise Shared
Services. I submit this declaration in support of CEOC’s Supplemental Objection. Except where
otherwise stated, I have personal knowledge of the matters stated in this declaration. If called to
testify regarding the matters in this declaration, I would testify competently thereto.
2.
On January 15, 2015, CEOC and 172 other of its direct and indirect subsidiaries
(“Debtors”) filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the Northern
District of Illinois.
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The Debtors are Caesars’ largest operating subsidiaries. They own, operate, or
manage 38 casinos in 14 states and 5 countries. For the 12 months ending September 30, 2014,
the Debtors contributed approximately $5.4 billion (64%) of Caesars’ $8.4 billion in total net
revenues.
Chicago Venue Selection
4.
The Debtors selected Chicago’s Northern District of Illinois to file their voluntary
Chapter 11 petitions following a thorough diligence process involving the company and its
advisors. The Debtors and their advisors concluded that Chicago affords the best opportunity to
achieve a consensual restructuring and maximize the value of the Debtors’ estates. This
conclusion was based in part on strategic and legal considerations that I was not personally
involved with. In addition, a Chicago venue is supported by operational considerations of which
I do have personal knowledge.
5.
From an operational standpoint, Chicago is accessible, convenient, home to
important CEOC operations, and the Midwest is one of the hubs of CEOC’s nationwide
operations.
Chicago’s Central Location and Accessibility
6.
Chicago is a U.S. transportation and financial hub. It is easily accessible via its
two major international airports.
7.
Chicago is geographically positioned at the center of both the country and
CEOC’s nationwide operations.
Debtors’ Operations in Chicagoland and Illinois
8.
The principal assets and operations of Des Plaines Development Limited
Partnership consist of the Harrah’s Joliet Casino Hotel. The casino and hotel, and principal
business of the Partnership, are located in Joliet, Illinois, within the Northern District of Illinois
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and approximately 45 miles driving distance from the U.S. Bankruptcy Court for the Northern
District of Illinois. The casino and hotel are staffed by approximately 900 employees. For the
twelve months ending September 30, 2014, Harrah’s Joliet had gross revenues totaling
9.
Debtors also own and operate the Horseshoe Casino Hammond, in Hammond,
Indiana. The Horseshoe Hammond is approximately 20 miles driving distance from the U.S.
Bankruptcy Court for the Northern District of Illinois. For the twelve months ending September
30, 2014, the Horseshoe Hammond had gross revenues totaling
10.
The total asset value of the two Chicagoland properties is approximately
$1 billion. Management’s planned 2015 EBITDA for just the Chicagoland properties is about
15% of Debtors’ total projected 2015 EBITDA. The Chicagoland properties collectively have
approximately 2,953 employees, 4,100 slot machines, 200 hotel rooms, and 10 restaurants.
11.
In addition, another Debtor, Southern Illinois Riverboat/Casino Cruises, Inc., is
incorporated in Illinois. It owns and operates the Harrah’s Metropolis hotel and casino located in
southern Illinois. It has no material assets outside of Illinois. Harrah’s Metropolis employs 530
people. For the twelve months ending September 30, 2014, Harrah’s Metropolis had gross
revenues totaling
Debtors’ Operations in the Midwest
12.
Debtors’ largest concentration of domestic casinos is in the Midwest region of the
United States, where seven of the 19 domestic casinos that Debtors own or operate are located,
including Harrah’s Joliet, Horseshoe Hammond, Harrah’s Metropolis, Horseshoe Southern
Indiana, Horseshoe Council Bluffs, Harrah’s Council Bluffs, and Harrah’s North Kansas City.
This does not include CEOC’s three Ohio properties (Horseshoe Cleveland, Horseshoe
Cincinnati and ThistleDown Racino), which are not currently Debtors.
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Debtors’ Midwest properties have a total asset value of about $2.5 billion, account
for more than $1.5 billion in gross revenues, and approximately one-third of Debtors’ projected
2015 EBITDA. The Debtors’ Midwest properties have approximately 10,680 slot machines and
1,600 hotel rooms.
14.
The Debtors employ approximately 32,000 people. Approximately 7,500—or
almost one-fourth of Debtors’ total employees—are in the Midwest, including 600 union
members. The Debtors have nearly 3,000 employees in the Chicagoland area alone, and another
530 in Metropolis, Illinois.
Debtors’ Operations in Nevada
15.
In addition to the Midwest, the Debtors have a significant presence in Nevada,
which is Debtors’ second-largest operational region measured by revenues and EBITDA.
CEOC’s corporate headquarters is located in Las Vegas, Nevada. The Debtors also own and
operate four casinos in Nevada, including Caesars Palace Las Vegas, Harrah’s Reno, and
Harrah’s and Harvey Lake Tahoe.
16.
Debtors’ Nevada properties have a total asset value of approximately $3.5 billion,
and account for approximately $1.4 billion in gross revenues and almost one-third of the
Debtors’ projected 2015 EBITDA. Debtors have about 8,962 employees in Nevada, 3,630 slots,
and 6,430 hotel rooms.
17.
Las Vegas is the primary location for the majority of the Debtors’ books and
records.
Debtors’ Operations in the South
18.
Debtors own and operate five casinos in the South. These properties account for
more than $640 million in annual revenues. Debtors’ properties in the South have about 5,200
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slot machines and 1,730 hotel rooms. The Debtors have around 4,126 employees in the South,
including me as CEO of CEOC.
Debtors’ Operations in the Northeast
19.
Debtors also own, operate, or manage three casino properties in the Northeast,
two in Atlantic City and one in Philadelphia. On a regional basis, these properties account for
approximately $980 million in gross revenues, which is over $500 million less than Debtors’
Midwest properties. The Northeast properties have a total asset value of about $600 million, or
about one-quarter of the Midwest properties’ asset value and less than one-fifth of the Nevada
properties’ asset value. The Northeast properties account for about 10% of the Debtors’ planned
2015 EBITDA, less than the approximately one-third EBITDA which each of the Midwest and
Nevada operational regions contribute. The Debtors have approximately 7,135 employees, 6,980
slot machines, and 2,890 hotel rooms in the Northeast.
Debtors’ Operations in Delaware
20.
CEOC and certain filing subsidiaries are incorporated in Delaware, but to my
knowledge that is their only connection to the state. CEOC does not own or operate any casino
properties in Delaware, and in fact has no operating assets at all in Delaware. CEOC has no
employees in Delaware, it generates no revenue in Delaware, and its books and records are not
maintained in Delaware.
Location of Board Members and Key Witnesses
21.
A majority of the Debtors’ executives live and work in Las Vegas. Fourteen of
the Debtors’ executives live, and 15 of the Debtors’ executives work, in Las Vegas.
22.
CEOC Chief Financial Officer, Mary Beth Higgins, is one of Debtors’ officers
who works and resides in Las Vegas.
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CEOC’s General Counsel, Tim Lambert, works in Joliet, just outside of Chicago,
and lives in Plainfield, Illinois.
24.
The Chairman of the CEOC Board of Directors, Gary Loveman, works and
resides in Las Vegas. He also has homes in Massachusetts, North Carolina, and Vermont. None
of the CEOC Board members works or resides in Delaware.
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