Hail New Caesars! as refinancing agreement revealed

Hail New Caesars! as refinancing agreement revealed

Wednesday, February 22, 2017 Posted by Andy McCarron
New financing sets company on path to restructure

Caesars Entertainment has announced the details of the refinancing that will put the company on a new debt footing with its creditors and will set it on the path towards the formation of New Caesars.

The terms of the new debt deal means New Caesars will start life with $1,44bn of debt comprising a $1.235bn seven-year secured term loan with a further $200m potential five-year senior secured revolver facility also in place.

The loans have been arranged in line with the details of the reorganisation agreed in the Chicago bankruptcy court in January. Along with the merger agreement also agreed this week between CEC and Caesars Acquisition Company (CAC), the debt deal is “an important milestone” as the company attempts to leave behind it the previous debt and bankruptcy imbroglio which has bedevilled the company for the past two years.

The new debt deal comes after Caesars Entertainment released its most recent results showing net revenue for the full tear rising 2.8 percent to $3.9bn on the back of strength in its key Las Vegas properties.

Net losses hit $2.7bn caused by the $5.7bn hit taken on the restructuring of the company. This was partly offset by the sale of the social gaming division late in the year. Adjusted EBITDA rose 8.6 percent to $1.1bn which the company said was driven by both net revenue increases and efficiency initiatives.

Chief executive Mark Frissora said of the results: “This year, we intend to deliver additional cash flow and margin improvements while completing CEOC's restructuring. These actions will allow us to continue to generate more value for our stakeholders as we execute against our long-term plan.”

Caesars finally reached agreement in court to emerge from Chapter 11 bankruptcy proceedings in January after the court accepted a new version of the reorganisation plan. The plan sees the previous private equity owners of the company, Apollo and TPG, finally lose control of the business.

Totally Gaming says: The long, complicated and seemingly endless Caesars bankruptcy and subsequent reorganisation is reaching its final stages. The New Caesars will be on a sounder footing to face the future, albeit facing the same challenges as the old Caesars. That is, its footprint is almost exclusively in the US and now shorn of the social gaming unit, it does not have a strong enough online footprint. But with new debt facilities and without the bankruptcy hanging over its head, it at least has the chance to concentrate on the business side and not endless debt discussions.

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