Caesars looks to life beyond bankruptcy

Caesars looks to life beyond bankruptcy

Wednesday, November 9, 2016
Key milestone passed as results show progress

Caesars Entertainment Corporation’s first results since it sealed an agreement with its bondholders in the bankruptcy courts saw the company turn around a net loss of $756m in the same period last year to a slim profit of $5m.

This was on net revenues for the three months to September that rose 3% to $986m. However, it was the sale of the Playtika social gaming unit in the summer for $4.2bn which largely accounted for the move into positive territory, albeit most of this went towards a $3bn accrual related to the restructuring of its bankrupt operating unit, Caesars Entertainment Operating Company (CEOC).

Nevertheless, Mark Frissora, chief executive at Caesars claimed the results were “another solid quarter of performance.” He added that the agreement on the part of all CEOC’s major creditor groups was a “key milestone” as the company looked to reach a conclusion to the bankruptcy saga in 2017.

“Once the restructuring is complete, management will be able to turn its full attention towards our strategic priorities, which we believe will continue to drive value to all of our stakeholders,” he commented on the analyst conference call.

Indeed, he added that once the agreements with bondholders are signed in the new year, the company will once again have a strong balance sheet and will look to new opportunities both in the US and further afield. “Leverage will be a little bit lower than what most of the public companies are at right now, probably a turn lower on debt-to-EBITDA. And so, we'll take advantage of that,” he said.

“We think there will be development opportunities once we get out of bankruptcy,” he added. “We haven't been able to pursue those obviously for the last couple of years, but given our regional presence, we think there is opportunity in some of those regional markets.”

“We also know that globally there is a lot of development projects that we certainly have our row in the water but nothing has come to fruition. But you certainly heard MGM talk about those today. We are certainly – we are in the mix on all those and we'll make sure that we pursue those and there will be lots of growth opportunities globally going forward the next couple of years.”

Back in the US, the company made much of its recent efforts to look to strategic developments particularly with regards to skill gaming. During the period the company announced agreements with Gamblit and GameCo to introduce skill gaming to casino floors. The Gamblit agreement will see the company roll out new skill-based gaming machines first in California and then Nevada.

The agreement with GameCo will see the company introduce video game gambling machines in Atlantic City. Following the receipt of a regulatory approval in October, Harrah's, Bally's and Caesars now feature a total of 21 gaming positions at GameCo's new offering Danger Arena.

This first-person action game where players' skill determines the payout combines the fun and entertainment of video games, e-sports and gambling, all in one experience. The company said it was proud to be the first to bring these innovative games to its customers and plan to make skill-based games an increasingly important part of its gaming environments.

Totally Gaming says: Caesars can finally look to the future – or at least it will be once it finally brings an end to the bankruptcy proceedings next year. The company may have offloaded its social gaming unit – for a huge profit – but the moves made towards introducing skill gaming to casino floors in the US are a sign that the company is still looking to be innovative.

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