Caesars Entertainment ‘needed to take action’ over debt says spokesperson

Caesars Entertainment ‘needed to take action’ over debt says spokesperson

Friday, November 21, 2014

Caesars Entertainment has opted to introduce a restructuring plan as part of a move to take action over an “unsustainable debt burden”, a spokesperson for the operator told TotallyGaming.com.

Reports have emerged this week about Caesars considering plans to split the company in two in an effort to solve its debt problems and appease creditors. The operator, which owns 40 properties across North America, owes approximately $22.8bn (€18.2bn) to a number of different creditors.

Under one plan, which is amongst several being considered by the operator, Caesars would be divided into a real estate investment trust to own its various casinos and a separate company to run these properties. The plans were outlined in documents filed with the Securities and Exchange Commission, following the decision by both lender Silver Point Capital and hedge-fund Perry Crop to exit restructuring talks last month.

Earlier this week, Caesars said it would not have enough money to repay debts by the fourth quarter of 2015 if it cannot 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.

Caesars has already 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.

In response to the reports, Gary Thompson, director of corporate communications at Caesars, told TotallyGaming.com that the operator has been forced to take action over its mounting debt problems.

“We needed to take action to deal with the unsustainable debt burden afflicting our Caesars Entertainment Operating Company and entered into negotiations with certain first-lien creditors to review various options,” Thompson told TotallyGaming.com.

“As noted in an 8-K filed with the Securities and Exchange Commission yesterday (Thursday), those talks are continuing.”

Thompson said that by reducing the debt, the operator would be able to push ahead with its plans to introduce new services for customers.

“Reducing debt to a manageable level will enable us to have more capital to spend on adding the amenities our industry’s customers want,” he said.

“We are very focused on continuing to provide the facilities, services and gaming and entertainment options our customers want. In addition, we are pursuing new casino-resort development projects in the US – New York state being one example – as well as abroad in Korea, the Philippines and elsewhere.”

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