\nCasino giant Caesars Entertainment Corp., attempted to clarify planned cost-saving measures Thursday, saying it will reduce its 68,000-person workforce nationwide by less than 1 percent.<\/p>\n
\tThe company, which operates nearly 40 casinos in 14 U.S. states and the Canadian province of Ontario, is attempting to restructure its gaming industry-high $22.8 billion debt.<\/p>\n
\tThe company has held private talks with its banks and lenders since September and is reportedly planning a prearranged bankruptcy filing for Caesars\u2019 largest unit as soon as January.<\/p>\n
\tCaesars said this week it hopes to create an extra $250 million to $300 million in cash flow next year through various cost-savings measures.<\/p>\n
\tIn a statement Thursday, Caesars spokesman Gary Thompson said the company would eliminate jobs but the numbers would be small.<\/p>\n
\t\u201cAs part of the company\u2019s ongoing efforts to ensure operating costs are aligned with the current environment, we are acting to reduce expenses across the company through a variety of initiatives in operations, marketing and corporate expenses,\u201d Thompson said. \u201cAmong the initiatives are enterprisewide job reductions that account for less than 1 percent of the company\u2019s work force.\u201d<\/p>\n
\tIn Nevada, where the company operates 14 hotel-casinos in Las Vegas, Reno, Lake Tahoe and Laughlin, Caesars employs roughly 20,000 workers.<\/p>\n
\tFitch Ratings Service gaming analyst Alex Bumazhny speculated that few of the cutbacks would come from Caesars\u2019 nine resorts on or near the Strip. The company\u2019s Strip operations \u201chad a generally good performance\u201d during the third quarter.<\/p>\n
\t\u201cThere is not much more upside from cutting back in Las Vegas,\u201d Bumazhny said.<\/p>\n
\tNews of the potential bankruptcy restructuring kept investors enthused about Caesars Thursday. Shares of the company increased $2.84, or 20.78 percent, to close at $16.51 on the Nasdaq. A day earlier, Caesars shares rose 22.71 percent.<\/p>\n
\tAnalysts said Caesars Entertainment Operation Co., one of the company\u2019s operating divisions, \u201cis burning through cash\u201d and is the most likely candidate to be restructured through a bankruptcy.<\/p>\n
\tCaesars has carried the debt since 2008, when the company was acquired by two private equity firms in a leveraged buyout.<\/p>\n
\tGaming analysts continued to question how a bankruptcy filing for Caesars would be structured.<\/p>\n
\tKim Noland, director of high yield research at Gimme Credit, an independent research service on corporate bonds, said Thursday the issue that concerns second lien bondholders \u2014 Caesars\u2019 transfer of various hotel-casino properties into different affiliated management divisions \u2014 doesn\u2019t seem to go away through a restructuring.<\/p>\n
\t\u201cWe wonder therefore how the asset transfers pass the \u2018red face\u2019 test but figure bond trading prices are indication that some junior creditors are simply voting with their feet,\u201d Noland wrote in a research note. \u201cAn agreement by all creditor classes, as difficult as that may be to achieve, likely would not reverse the asset transfers nor would it revive the parent company guarantee that formerly protected bondholders at the subsidiary.\u201d<\/p>\n
\tCaesars Entertainment Operation owns the largest portion of the company\u2019s resorts, including Caesars Palace, Caesars Atlantic City, Harrah\u2019s Reno and many of the company\u2019s regional properties. The properties also owe about 80 percent of the company\u2019s overall debt.<\/p>\n
\tCaesars\u2019 other major operating division is Caesars Growth Partners, which is publicly traded on Nasdaq as Caesars Acquisition Co. The business, 58 percent owned by Caesars Entertainment, includes The Cromwell, The Linq Hotel, Bally\u2019s Las Vegas, Planet Hollywood Resort, Harrah\u2019s New Orleans, a 41 percent interest in Horseshoe Baltimore and Caesars Interactive Entertainment.<\/p>\n
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