Caesars Entertainment considers splitting under debt resolution plan

Caesars Entertainment considers splitting under debt resolution plan

Thursday, November 20, 2014

Caesars Entertainment has unveiled a potential plan that would see the US gaming company split in two as part of a move to solve its debt problems and appease creditors.
 
The operator, which boasts 40 properties across the North American market, owes around $22.8bn (€18.2 billion) to a host of creditors.
 
The plan, which is one of several being considered according to documents filed with the Securities and Exchange Commission, has been unveiled after last month lender Silver Point Capital and hedge-fund Perry Crop both exited restructuring talks. Under the plan, Caesars would be divided into a real estate investment trust to own its various casinos and a separate company to run these properties.
 
The move comes at a troubling time for Caesars, which, after being taken private for $30.7bn in 2008 by Apollo Global Management and TPG Capital, has lost money each year since 2009. The operator has also struggled to meet its debt payments.
 
Earlier this week, Caesars stated that it would not have enough money to repay its debts by the fourth quarter of 2015 if it is not able to restructure its obligations through creditor negotiation or filing Chapter 11 bankruptcy. The Bloomberg news agency reported that bankruptcy could be filed as early as January next year.
 
Meanwhile, in a further blow for Caesars, the operator has begun laying off workers company-wide in an effort to save on costs. The firm plans to lay off around one per cent of its 68,000 workers as part of a move to create an additional $250-300m in cash flow next year.
 
Although Caesars did not respond to a request from TotallyGaming.com to clarify its position and expand on the restructuring plans, spokesperson Gary Thompson had earlier said that the laying off of staff would help a wider effort to reduce expenses.
 
“As part of the company’s 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,” Thompson said. “Among the initiatives are enterprise-wide job reductions that account for less than one per cent of the company’s work force.”
 

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