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CHAIRPERSON JONES: Okay. Would you each identify yourself, and you
have three minutes to speak. COMMITTEE MEMBER FECKNER: Turn your microphone
on. CHAIRPERSON JONES: Turn your mic on.
MS. GIACHINO: Okay. Good afternoon, Mr. Chairman and Committee. My name is Alyssa
Giachino. I follow private equity and real estate with
Unite Here, the Union of Hotel and Casino Employees, including
employees of Caesars Entertainment.
As you may know, CalPERS is a limited partner in
both Apollo Investment Fund VI, a buyout fund sponsored by
Apollo Global Management and TPG Partners V, sponsored by
TPG Capital. One of the largest buyouts for those funds
was Caesars Entertainment, the largest casino
company in the world. Contracts for 50,000 workers in Las
Vegas expired on June 1st, including 12,000 Caesars workers,
some of who traveled here to address you today.
These contracts are on short-term extensions that
can be terminated with a few days notice. We are
appreciative that CalPERS sent letters to Apollo and TPG
in March noting the importance of the negotiation process,
and encouraging good faith bargaining leading to a
successful outcome. For investors like CalPERS Caesars has been
deeply disappointing. The market capitalization has lost
two-thirds of its value since Apollo and TPG took over in
2008. Last month, Apollo CEO Leon Black acknowledged in
Oregon that his film lost its discipline with Caesars by
paying too high a price and leveraging too much. But
Apollo and TPG recouped their own general partner
investments early on. In Apollo's case, it recovered its own commitment
on day one through the transaction fees alone, and TPG
recover its GP investment by 2010. Between transaction and monitoring fees Apollo
and TPG have Drawn 345 million from Caesars as of the end
of 2012. The general partner stands to collect another
150 in monitoring fees over the next five years. That's
on top of limited partner fees. The large transaction monitoring fees clearly
create a misalignment of interests between Apollo and TPG
as the general partners and limited partners, including
CalPERS. While hundreds of millions of dollars have been
drained out of Caesars through these fees, the casinos
have experienced staffing reductions that negatively
impact the guest experience as workers will describe.
Caesars is heavily dependent on succeeding in Las
Vegas where 45 percent of the companies EBITDA comes from.
For a business built on guests having the time of their
lives, cutting staff and sapping money out of the company
through fees hardly seems like a winning formula. Strengthening earnings in Las Vegas could
improve the outlook for Caesars particularly when
the Las Vegas market is expected to continue improving.
We think both workers and limited partners, like CalPERS,
would be best served by cash being re-invested in Caesars
rather than pulled out as fees.
We believe CalPERS should not commit to Apollo's Fund VIII until TPG and Apollo cease collecting
monitoring fees from Caesars.
Please review the materials that we have submitted for the record.
Thank you. CHAIRPERSON JONES: Okay.
MR. PORTILLO: Good afternoon. My name is Elmer Portillo. I am a food server from Planet Hollywood's
Casino in Las Vegas. I am working there for 13 years.
I'm here with another three workers from Caesars Entertainment Casinos. We are here to represent
12,000 workers from Caesars Casinos in Las Vegas,
whose contract was expired a few weeks ago.
As workers we have experienced cutbacks throughout the casinos over the past few years.
We have a negative impact to have ability to deliver
to the best experience for the customers. At the same
time we know that Apollo and TPG have been draining millions
of dollars every years from the current company.
We want Caesars to succeed. Over the past two
decades, casinos in Vegas grew up and raking in profit.
Workers have been part of these successes. We have
contributed to the energy and the skill of restaurant
servers, cook, and room cleaners to bring it to Las Vegas.
I agree experience keep them coming back, and
throughout negative this and we want them to sign
contract. We have earned fair compensation for our
workers and pension. Under Apollo and TPG management, Caesars has
not been successful. In the past few years, there
have been so many reductions of supplies workers keeping
staff and this make hard work to give the kind customer
service. I want to give it to my customers to provide
quality service we use and bus. We can't. It's impossible
because we lack supplies. My job makes me try provide
knowledge -- my knowledge to create successes to make the
company successful, but I am not am able to reach
this goal. My job has given opportunity to provide to
my family, my kids, and we're going to the school
and have a standard of living in Vegas. We have to fight
really hard in Las Vegas to this standard of living. Now,
we feel like -- I'm feeling to do not do my job ever
since when TPG and Apollo took over.
MR. RUFINO: My name is Francisco Rufino, and I
work at the Paris Hotel in Las Vegas, where I worked there
for 13 years. I took workers and I have also seen deep
cuts to the other properties since TPG and Apollo took
over in 2008. I am a cook at Paris Hotel at the Village
Buffet. And before, we used to have a cook helper
at every station Now, there's no cook helper in every station,
less tools, less equipment. It doesn't make any sense.
Now, I'm running short, and I cannot provide the same
qualities of work than I used to do before.
These cuts makes it harder for us to do the type
of work we cannot be proud of. This is only harder for us
physically and mentally. I also think about co-workers
that have gotten laid off that no longer be able to
provide for their families. All we want is to feel good about the work
we could and the ability to provide for our families.
Ever since TPG and Apollo took over, they have
made only difficult for us. Please urge Caesars to sign
our fair contract and we can continue to provide for
our families and customers.
Thank you. MR. FERRARA. Hi. My name is Cindy Ferrara.
I work as a cook at Caesars Palace Hotel and
Casino in Las Vegas, Nevada, where I've worked for the past
21 years. My co-workers and I have also seen deep cuts
at our property since TPG and Apollo took over in
2008. I love my job and I love providing excellent customer
service, but TPG and Apollo have made it incredibly
difficult for me and my co-workers. We've seen cutbacks
in the number of cooks and kitchen workers. We're often
doing two to three jobs and become so crunched for time.
I worry about our safety in the kitchen, when we
are rushing around working so hard. We are often dealing
with faulty equipment, and I've seen equipment blowup
because they're not investing in the ongoing maintenance
of our equipment. Every day we run out of food and pans. We
find ourselves running to other kitchens to find
supplies. It's crazy. And it's not just happening in
my department, it's happening in every department.
Squeezing more out of workers is not the way to
solve Caesars problem. We can see that things are
starting to improve in Las Vegas. We believe Caesars can
succeed. We see a fair contract as an investment in the
workers that bring Caesars to life. We believe TPG and
Apollo should be investing in creating Caesars success,
not sucking out tens of millions in fees. We urge you to demand TPG and Apollo to stop
taking out monitoring fees and instead focusing on
investing those dollars in building a stronger company to
the benefit of workers and investors like CalPERS.
We are nervous about the negotiations. We have
spent decades building a standard for casino workers in
Las Vegas that allow us the opportunity to provide for
ourselves, our families and our community. We just want
to be treated fairly and with respect. We hope these negotiations do not reach a
point where we have to take drastic action, but
we are getting prepared, nonetheless. Just a few weeks ago,
we held a membership vote, and nearly 9,000 attended
and voted overwhelmingly by 92 percent to raise our
dues $25 a month in the event of a strike to support striking
workers. We hope to avert a strike, but we are willing
to do so -- to do whatever it takes to continue
to provide a future for our families, ourselves, and our
community. Please urge Caesars to sign a fair contract.
Thank you. CHAIRPERSON JONES: Okay. Thank you for your
interest in CalPERS and thank you for taking the time to
come and share your views with us. Thank you.
The next public speaker we have Yvonne Walker, and then Dennak Murphy.
MS. WALKER: Good afternoon, Mr. Chair and Committee members. It's good to see all of
you. I wanted to come and speak today on the Koch
brothers acquisition of the Tribune Group, The Times. And
so I want to speak in opposition to it. I am the President of the SEIU Local 1000.
I represent 95,000 State workers, give or take.
And we feel very strongly that this is a sale that should
not go through. We believe that CalPERS has a stake
in this through their investments with Oaktree Capital
and other investments.
Recent press has said that the Koch brothers are
going to do this. We believe that having the Koch
brothers acquire these papers would result in more attacks
on workers, public workers specifically. And we just
think it's blatantly wrong for our monies to be used
against us. And if Oaktree Capital and the Tribune Board
sell to the Koch brothers, then the security of our
members are at risk. So specifically, we're asking that the Board
-- you communicate your concern to your investment
managers regarding the long-term implications of the
sale of the Tribune Company to the Koch brothers. We do
recognize that you have a fiduciary obligation to earn
a good return on your investments, but a good return does
not depend on a quick sale to the Koch brothers.
And we do understand that you are a passive investor, but we believe that sometimes fiduciaries
cannot afford to be passive. And the Tribune Company
has recently suggested that they may not sell
the papers. So we're also asking that you confirm this through
discussions with Oaktree. And that's our ask.
CHAIRPERSON JONES: Thank you. Dennak.
Go ahead. COMMITTEE MEMBER LOCKYER: It maybe a
professional staff. The last time I, a couple weeks ago,
talked with a potential alternative bidder on this
property, they pointed out that the book hadn't even been
published yet. So it was all just gossip. Do we know
whether there's even a book out yet? Maybe Mr. Murphy does. Can any investor do
any analytics yet?
MR. MURPHY: This is Dennak Murphy with Service Employees International Union. To our understanding
the books have been prepared for weeks and ready
to be put out. They have not been given to prospective
buyers. There have been many -- we believe many private
discussions between representatives from the Tribune and
Oaktree and interest parties. This deal could happen in -- without an open
auction that would involve the books. It could just be a
private deal that's made. There are lots of different
approaches here. We think the question here -- obviously
there's nothing hard and fast out there that we can
comment on at this point in terms of where this is going.
There is a -- the Kochs have demonstrated -- the
Koch brothers and Koch industry have demonstrated and
articulated very clearly their interest in a media
platform to promote their agenda. We have very clear
evidence that they are interested in the Tribune Group.
And we are -- we think that there are risks, very real
risk for long-term investors like CalPERS, as well as
others. And we think that the issue around journalistic
integrity is an important issue, is a proper fiduciary
issue for CalPERS to communicate to its agents, its
investment managers, and we would hope that you would do
that. CHAIRPERSON JONES: Okay. So did you still
want to speak or are you just -- is that --
MR. MURPHY: I think I've said my peace. I think
Yvonne certainly has said it as well. So thank you.
CHAIRPERSON JONES: Okay. Well, thank you both for coming. And I will ask staff to discuss
this matter with you. So, again, thank you for sharing
the information with us.
MS. WALKER: Thank you. CHAIRPERSON JONES: Okay. Where is it?
This meeting is adjourned.