Caesars selling 4 casinos for $1.8 billion in debt restructuring

1. The Parent Company CZR's cash position has deteriorated by $750 Million in the last 9 months. At this burn rate, they would completely run out of cash in about 24 months.
2. The Parent Company CZR's debt load has increased by $640 Million in the last 9 months. This long term debt is now an unsustainable 21 Billion. They are unlikely to be able to sell more junk bonds.
3. They had substantial $ commitments to finish The Cromwell and finish the renovations at the QUAD....which would have burned their cash reserve even quicker.
4. The Subsidiary has a clean balance sheet and access to capital.

So, the deal allows them to complete their renovations and infuse some much needed cash back into CZR. I doubt any of this cash is going to be used to pay off CZR debt. It's going to be used for Operations while they offer their bondholder's haircuts to avoid bankruptcy.

If they can't restructure the 21 billion in debt, they'll wipe it out in bankruptcy, while completely protecting Planet Ho, A newly renovated Quad, A newly renovated Bally's Harrah's NO, A newly renovated Cromwell, The World Series of Poker and their electronic gaming division.

Now if you feel lucky, you could invest in some Harrah's Operating 10% bonds maturing in 2018. Those puppies are yielding about 21% to maturity. If you feel lucky.

DonDiego longs for the good old days,

. . . when the Lum's restaurant chain bought Caesars Palace for $60-million, . . . and then were unable to make the payments, . . . and negotiated a new deal, . . . and then leaked inside-information to Lehman Brothers, . . . all of which resulted in an insider trading scandal, . . .

. . . and the Chairman came up with the idea of a one-way moving sidewalk to whisk patrons into the casino, but not back out, . . .

. . . followed by the renamed Caesars World land deals in Florida and the Poconos with, among others, Samuel Cohen who had earlier spent some jail-time for a $36 million profit-skimming scheme at Bugsy Siegel's Flamingo Hotel, . . . which associations led to delays in obtaining a New Jersey gaming license in Atlantic City.

Ahh, . . . times were simpler then. And debts were measured in $millions, not $billions.

Ref: Caesars World

Caesars Sells To Itself

LOL at the juxtaposition of these two sentences in the initially linked story:

" Caesars Entertainment will manage the properties. (so) The deal prompted Moody's Investors Service to put Caesars Entertainment Operating Company Inc.'s ratings on review for downgrade."

Company X announced a deal to manage some properties it formerly owned, so lender beware.