{"id":19155,"date":"2014-03-07T05:30:28","date_gmt":"2014-03-07T05:30:28","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=19155"},"modified":"2014-03-06T22:36:56","modified_gmt":"2014-03-06T22:36:56","slug":"caesars-entertainment-sells-properties-to-subsidiary-to-pay-down-debt","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/caesars-entertainment-sells-properties-to-subsidiary-to-pay-down-debt\/","title":{"rendered":"Caesars Entertainment Sells Properties to Subsidiary to Pay Down Debt"},"content":{"rendered":"
\"Caesars
In a somewhat incestuous move, Caesars Entertainment is selling off four of its casinos to its own subsidiary, Caesars Acquisition Company, in an effort to pay down some of its massive debt.<\/figcaption><\/figure>\n

Here’s a riddle: when does a Caesars location no longer belong to Caesars Entertainment per se? Answer: when they sell it to another company they own instead. That\u2019s the unusual situation caused by a sale of four properties owned by Caesars to their own subsidiary; a move made to help restructure the company\u2019s largely unsustainable debt load.<\/p>\n

Selling Themselves Short<\/h2>\n

Caesars Entertainment Corp. has agreed to sell four properties to a separate firm that is majority-owned by Caesars for the price of $2.2 billion. The properties being sold include Harrah\u2019s New Orleans, as well as three Las Vegas properties: Bally\u2019s, The Quad, and The Cromwell<\/a>, the last of which is scheduled to open this year. The new owner will be Caesars Growth Partners, an entity that is 58 percent owned by Caesars itself.<\/p>\n

The idea here is to help maximize the potential growth of Caesars Entertainment, while also structuring things to avoid adding more debt to the company. Caesars has some $24.5 billion in debt<\/a>, and is also struggling to increase its revenues \u2013 a potentially dangerous combination.<\/p>\n

According to Caesars, the asset sale will increase liquidity in Caesars Entertainment, while also avoiding giving those properties up to a competitor. Caesars Growth Partners \u2013 which is co-owned between Caesars Entertainment and a publicly traded holding company known as Caesars Acquisition Company \u2013 will better be able to invest in those properties, as it doesn\u2019t suffer from the same debt issues as the main company.<\/p><\/blockquote>\n

According to Caesars Entertainment CEO Gary Loveman, the company has made \u201cconsiderable progress\u201d towards addressing the financial issues they face. Some of the proceeds from the sale will go directly to paying down the company\u2019s debt, though no exact figures were given.<\/p>\n

\u201cToday\u2019s asset sales mark an important step in our ongoing efforts to repair Caesars Entertainment\u2019s balance sheet,\u201d Loveman said in a statement.<\/p>\n

Indebtedness<\/h2>\n

It\u2019s been no secret in the financial world that the Caesars debt load has spiraled out of control; it’s the industry’s largest by a long shot. According to analysts, the sale will help with this, as it pushes back any immediate concerns about the company defaulting on its debt.<\/p>\n

But long-term issues still remain. Caesars has failed to get a property situated in Macau, which has left its revenues lagging far behind its major Las Vegas rivals. That – along with the economic downturn that slashed revenues over the last five years, particularly at their flagship Las Vegas properties – \u00a0have combined with the massive debt to create doubts with investors about the company’s ability to bounce back.<\/p>\n

\u201cSince being taken private near the beginning of the global financial crisis, we have faced an incredibly challenging business environment and a highly leveraged capital structure,\u201d Loveman said.<\/p>\n

We need to remember that line next time we hit a relative up for a loan.<\/p>\n

The deal will see Caesars Growth Partners give Caesars Entertainment $1.8 billion in cash. The subsidiary will also assume $185 million in debt, and commit to more than $200 million in renovations to The Quad, which has some of the lowest room rates on the Las Vegas Strip. Caesars Entertainment will continue to manage the properties, and will receive fees for doing so.<\/p>\n

Before this move, Caesars Growth Partners had already owned two casinos, a hotel tower, and the entirety of Caesars\u2019 online and interactive gaming business; the latter oversees their WSOP-branded online presence in Nevada and New Jersey. According to at least one analyst, this could be a negative for stakeholders in the company.<\/p>\n

\u201cBy acquiring four casino properties, it creates a far more convoluted business model and one that has shifted away from the high-growth\/high-margin online business that likely attracted many investors in the first place,\u201d said Eilers Research analyst Adam Krejcik.<\/p>\n","protected":false},"excerpt":{"rendered":"

Here’s a riddle: when does a Caesars location no longer belong to Caesars Entertainment per se? Answer: when they sell it to another company they own instead. That\u2019s the unusual situation caused by a sale of four properties owned by Caesars to their own subsidiary; a move made to help restructure the company\u2019s largely unsustainable […]<\/p>\n","protected":false},"author":42,"featured_media":19162,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,18],"tags":[],"acf":[],"yoast_head":"\nCaesars Entertainment Sells Properties to Subsidiary to Pay Down Debt<\/title>\n<meta name=\"description\" content=\"In an effort to pay down some its massive debt load, Caesars Entertainment is selling off four casino properties - but to its own subsidiary.\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Caesars Entertainment Sells Properties to Subsidiary to Pay Down Debt\" \/>\n<meta property=\"og:description\" content=\"In an effort to pay down some its massive debt load, Caesars Entertainment is selling off four casino properties - 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