Gary Loveman, the longtime chief executive of Caesars Entertainment, the troubled casino operator whose largest unit recently filed for Chapter 11 bankruptcy, plans to step down from that role, the company said on Wednesday.
He will be succeeded by Mark Frissora, the former chief executive of Hertz, who left the rental car company last year after pressure from activist investors. Mr Frissora will join the board of Caesars immediately and will be guided by Mr Loveman before taking the reins of the company on on July 1.
Mr Loveman, who will continue to serve as chairman of Caesars and of the unit now in bankruptcy, said in a statement that he believed “the time is ripe for a transition,” given that the company is “in the midst of a formal restructuring of one of its subsidiaries.” He will continue to oversee the restructuring of the unit, Caesars Entertainment Operating Company.
“Caesars has accomplished more than what we could have imagined when I arrived,” said Mr Loveman, who became chief executive in 2003 and built the company into an international gambling powerhouse.
Caesars, which was acquired for about US$30 billion in 2008 by two private equity firms, Apollo Global Management and TPG, has been losing money for years due to the recession and other issues. The private equity firms put the operating subsidiary into bankruptcy in Chicago last month, in an effort to shed debt and salvage value from their investment.
Mr Frissora’s background is in cars rather than casinos, but Caesars said he had valuable experience leading highly indebted companies. He joined Hertz in 2006 after the rental company was acquired in a private equity buyout, and he oversaw an expansion that included the acquisition of Dollar Thrifty. Before Hertz, he was the chief executive of Tenneco, a car parts maker.
Hertz, which went public soon after Mr Frissora joined, came under scrutiny last year by the billionaire investor Carl C. Icahn, who said he lacked “confidence in management.” Other activist hedge funds, including Fir Tree Partners and Jana Partners, also had stakes in the company. Mr Frissora stepped down in September, citing personal reasons.
“Mark has a long history of driving growth, optimizing operations and creating shareholder value,” Marc Rowan, a co-founder of Apollo, and David Bonderman, a co-founder of TPG, said in a statement on Wednesday.
The departure of Mr Loveman closes a long chapter for Caesars. A former professor at Harvard Business School, Mr Loveman was recruited in 1998 to join the regional gambling company that would become Caesars.
Among Mr Loveman’s early moves as the chief executive of the company, which was then known as Harrah’s, was to buy Caesars Entertainment for more than $5 billion, creating the biggest gambling company in the world. He also acquired Planet Hollywood and the World Series of Poker.
The company soon attracted the interest of Apollo and TPG. But soon after the buyout, Caesars fell on hard times as the recession hit and consumers cut back on gambling. The company, even as it engaged in numerous maneuvers to reduce its debt load, has not reported an annual profit since 2009.
It is now locked in a bitter fight over the bankrupt subsidiary with certain creditors, who have loudly complained that they would be shortchanged in the restructuring plan.
“My decision to begin to transition management now comes with the confidence that we have taken the steps necessary to ensure the company’s long-term success,” Mr Loveman said in the statement.
He said the restructuring of the operating subsidiary and a plan by the parent company to acquire a different subsidiary would “position Caesars for growth and prosperity for many years to come.”
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