Red Rock IPO means jackpot for Fertitta brothers

Apr 25, 2016 4:59 PM

Brothers Frank and Lorenzo Fertitta appear to be holding winning hands as their Red Rock Resorts prepares for its upcoming initial public offering this week.

Frank, 54, and Lorenzo, 47, are chief executive officer and director, respectively, of Las Vegas-based Red Rock. At the high end of its marketed range, Red Rock could raise $572.25 million, making it the largest IPO so far this year, according to data compiled by Bloomberg that excludes REITs, special purpose companies, and closed-end and country funds.

The brothers stand to get several jackpots out of the deal: Proceeds from the sale of their casino management unit, annual payments linked to the tax benefits of becoming a public company and a huge chunk of voting rights once the shares are sold. They’ll also get the standard IPO proceeds from selling their own shares.

Red Rock is pitching the brothers’ control over the company as a plus for prospective investors, according to its roadshow presentation.

“We’re significantly committed,” Frank said in the presentation. “This is a big part of our family’s wealth and investment and we think it will be a good partnership between us and the public shareholders going forward.”

The biggest windfall – about $335 million – will come from the Fertittas’s casino-management unit. As part of the IPO, Red Rock will buy Fertitta Entertainment for $460 million minus debt, according to the offering documents. The brothers will each receive $113.5 million from the sale, while trusts for the benefit of their six children will receive a combined $106.8 million.

Phil Hevener has been writing about the Nevada gaming business for more than 30 years. Email: [email protected].