marzo 7, 2014 - 5:03 pm
Caesars Entertainment Corp. announced a deal Monday to sell three of its Strip resorts and Harrah’s New Orleans to its Caesars Growth Partners subsidiary for $2.2 billion.
The move is more akin to a transfer of assets to a company which was created last year to help the world’s largest casino operator expand its footprint while dealing with its gaming industry-high $23 billion of long-term debt.
Caesars Growth Partners already owns two of the company’s casinos, a hotel tower and Caesars’ interactive gaming business. Caesars Entertainment owns 58 percent of Caesars Growth Partners.
The casino operator will continue to manage the properties after the deal is finalized.
The transaction will result in cash proceeds of $1.8 billion and allow Caesars to reduce a portion of its debt.
“Today’s asset sales mark an important step in our ongoing efforts to repair Caesars Entertainment’s balance sheet,” Caesars Chairman and CEO Gary Loveman said in a statement.
Caesars Entertainment will transfer ownership of Bally’s Las Vegas, The Quad, the under-construction The Cromwell, and Harrah’s New Orleans to Caesars Growth Partners for $2.2 billion.
As part of the deal, Caesars Growth Partners will assume $185 million of debt associated with The Cromwell — formally Bill’s Gamblin’ Hall — and will spend $223 million to finish redevelopment of The Quad, which had been the Imperial Palace.
“To build equity value, we have employed a full complement of operating and financial tools,” Loveman said. “Since 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.”
Loveman said Caesars has grown the company while “deploying a wide array of financial and operational tools to manage the company’s capital structure and create value.”
Investors had a mixed reaction to the news. Amid a broad market sell-off, shares of Caesars Entertainment, traded on the Nasdaq Global Select, fell 37 cents or 1.43 percent to close at $25.59. Shares of Caesars Acquisition, the subsidiary that manages Caesars Growth Partners, fell 12 cents or 0.87 percent to close at $13.63 on the Nasdaq Global Select.
Eilers Research gaming analyst Adam Krejcik told investors the deal was positive for Caesars Entertainment shareholders, but a “neutral-to-negative” event for Caesars Acquisition shareholders.
In a research note, he said the acquisition of four casinos diminishes the reliance on the growing interactive business, which includes social gaming and online gaming in Nevada and New Jersey.