\nBy Howard Stutz, Las Vegas Review-Journal<\/p>\n
\tA leading gaming executive was asked on background a few months ago if he understood Caesars Entertainment Corp.\u2019s financial maneuverings to restructure the casino company\u2019s $24.2 billion in long-term debt.<\/p>\n
\tHe just smiled.<\/p>\n
\t\u201cGary seems to understand what he\u2019s doing.\u201d<\/p>\n
\tFor now, Caesars Entertainment Chairman Gary Loveman is an island unto himself.<\/p>\n
\tEarlier this month, in a lawsuit filed by Caesars seeking to block institutional investors from interfering with the restructuring efforts, Loveman said the company has undertaken more than 50 capital market transactions to improve the company\u2019s balance sheet and financial condition.<\/p>\n
\tAnother move happened last week.<\/p>\n
\tCaesars struck a deal with several investment groups to trim $548 million in debt off Caesars Entertainment Operating Co., the most heavily indebted of Caesars three business units. The move would also slice interest expenses by $34 million annually.<\/p>\n
\t\u201cWe are steadfast in our commitment to work constructively with creditors to deleverage (Caesars) and create value,\u201d Loveman said.<\/p>\n
\tBut is anyone in the investment community listening?<\/p>\n
\tMoody\u2019s Investors Service termed the most recent effort as \u201ccredit negative.\u201d An analyst for Fitch Ratings told Bloomberg News \u201cdefault is a real possibility\u201d for Caesars. Last week, following release of Caesars\u2019 second-quarter earnings, in which the company doubled its net loss to $466 million, Macquarie Securities gaming analyst Chad Beynon titled a report to investors, \u201cThe shell game picks up speed.\u201d<\/p>\n
\tBeynon is just one of several analysts unsure of how to define the company.<\/p>\n
\t\u201cFrom an equity perspective, in our view it is becoming almost impossible to assign an intrinsic valuation to Caesars without knowing what\u2019s going on behind the curtain within all three individual entities, particularly on the debt side,\u201d Beynon said.<\/p>\n
\tDaniel Jones, the manager of Avaring Capital Advisors LLC, writing for the financial website SeekingAlpha.com, said bankruptcy might be the company\u2019s only solution following second-quarter earnings.<\/p>\n
\t\u201cAt the moment, Mr. Market isn\u2019t terribly enthusiastic about Caesars, and for good reason,\u201d Jones wrote. \u201cThe company\u2019s revenue did manage to rise, albeit not as much as market participants hoped for, but its bottom line was far worse than anticipated.\u201d<\/p>\n
\tIn an interview nearly a year ago, Loveman was adamant Caesars would stay out of Bankruptcy Court to handle the debt. The figure was attached following the company\u2019s $30.7 billion leveraged buyout by two private equity firms in 2008.<\/p>\n
\tThe financial moves Caesars made in just the past 12 months include moving company-owned casinos, properties managed in joint operating agreements, and the interactive gaming division into three operating units.<\/p>\n
\tCaesars announced an overall restructuring plan in May that eliminated more than $1 billion in debt, raised another $1.75 billion in new debt, but with better interest terms and due dates.<\/p>\n
\tIn June, Caesars closed a poor-performing casino in Tunica, Miss. The company\u2019s Showboat Atlantic City is scheduled to close Aug. 31, which would leave Caesars with three resorts in the market. The company could be looking to sell or close some of its 50 gaming properties in 13 states.<\/p>\n
\tWells Fargo Securities gaming analyst Dennis Farrell Jr. said the closing of Showboat and two other Atlantic City casinos next month could boost results from the company\u2019s Harrah\u2019s Atlantic City in the Marina District.<\/p>\n
\tHowever, Farrell advised high-yield bond investors to invest in Caesars Entertainment Resort Properties, a division that controls The Linq and other Strip casinos.<\/p>\n
\tThe improvements in Las Vegas numbers and volume reported by Caesars and other operators show that the Strip \u201cshould outperform regional gaming trends in 2014, while generating positive discretionary free cash flow,\u201d Farrell said.<\/p>\n
\tCaesars\u2019 debt is the highest in the gaming industry. It\u2019s larger than the $18 billion in debt carried by Detroit when the municipality filed for bankruptcy last year.<\/p>\n
\tCaesars\u2019 debt dominates conversations despite successes.<\/p>\n
\tThe Linq, a retail, dining and entertainment district on the Strip next to the Flamingo, opened in March. The centerpiece High Roller observation wheel has attracted more than 500,000 riders since its opening.<\/p>\n
\tThe company\u2019s $442 million Horseshoe Casino Baltimore, which it owns in partnership with Rock Gaming, opens in less than a week. But the $24.2 billion is a lot to overcome.<\/p>\n
\t\u201cThe Caesars story remains relatively the same in our eyes, with fundamentals continuing to be soft in most of its markets and the significant debt load lingering as an overhang on the company,\u201d Beynon said.<\/p>\n
No replies were posted for this topic.<\/p>\n","protected":false},"excerpt":{"rendered":"
By Howard Stutz, Las Vegas Review-Journal A leading gaming executive was asked on background a few months ago if he understood Caesars Entertainment Corp.\u2019s financial maneuverings to restructure the casino company\u2019s $24.2 billion in long-term debt. He just smiled. \u201cGary…<\/p>\n","protected":false},"author":36,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-7866","post","type-post","status-publish","format-standard","hentry","category-latest-casino-news"],"_links":{"self":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/7866","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/comments?post=7866"}],"version-history":[{"count":0,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/7866\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/media?parent=7866"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/categories?post=7866"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/tags?post=7866"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}