Several banks have committed to roughly $5bn in debt financing to support billionaire Tilman Fertitta's takeover of Caesars Entertainment, according to people familiar with the matter. Morgan Stanley is among the lenders putting together the package, which would facilitate Fertitta's pursuit of one of the Las Vegas Strip's most recognizable casino brands. A potential deal remains several weeks away with significant hurdles still to overcome, but greater certainty over financing could smooth the path to completion.

Caesars carries an equity value of $5.4bn combined with roughly $25bn in debt, placing any transaction's enterprise value above $30bn with a premium. Fertitta's proposal valued Caesars in the low $30s per share, above its $26.24 trading price on Thursday. The deal would likely avoid a formal change of control, allowing existing loans and bonds to remain in place without requiring refinancing at higher rates.

Through Fertitta Entertainment, the Texas billionaire controls the Houston Rockets NBA franchise, Golden Nugget casinos, and a restaurant empire spanning Bubba Gump Shrimp Company and the famed Keens Steakhouse in New York. He also holds stakes in Wynn Resorts and DraftKings. Caesars CEO Tom Reeg and the Carano family, who acquired Caesars through Eldorado Resorts in 2019, would likely roll at least part of their equity stakes into the combined company.

Caesars emerged from bankruptcy in 2017 after struggling with a $24bn debt load following a 2005 leveraged buyout. The company's shares have fallen more than 75% from their 2021 peaks as Las Vegas travel normalized and investors grew concerned about sports betting and prediction markets pressuring the business. Its strong cash flow continues to attract lending banks and high-yield debt investors despite these headwinds.