{"id":9595,"date":"2012-09-07T15:13:58","date_gmt":"2012-09-07T23:13:58","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/?p=9595"},"modified":"2012-09-07T15:13:58","modified_gmt":"2012-09-07T23:13:58","slug":"emperor-lovemans-new-clothes","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/emperor-lovemans-new-clothes\/","title":{"rendered":"Emperor Loveman’s new clothes"},"content":{"rendered":"

\"\"When I said a Caesars Entertainment<\/strong> bankruptcy was a matter of when, not if, little idea did I have how soon that might be. Earlier this week, Fitch Ratings Service<\/strong> lowered Caesars’ bond rating to “negative,”<\/a> a veritable kiss of death for the company that carries $19.9 billion in debt. CEO Gary Loveman<\/strong> “could look to execute transactions that Fitch views as a default,” wrote a Fitch analyst. Or, it could try to build a life raft in the form of an IPO or spinoff of Caesars Interactive<\/strong>, which includes the World Series of Poker<\/strong>. The Motley Fool<\/em>, however, thinks the short-term gains are far outweighed by the long-term sacrifice<\/a>. Yours truly thinks the domestic revenue prospects from online gambling are much overrated, particularly by Loveman, but that’s one way to scare up some quick cash — “scare” being the operative verb. With Caesars looking at negative cash flow through 2015<\/a>, desperate measures are the order of the day — time to knock down that $500 million asking price for The Rio<\/strong>, Gary!<\/p>\n

\"\"The CEO\/CFO\/President\/Chariman\/High Pajandrum may also have to dismantle Caesars’ not-so-magical empire by trading away assets in lieu of repayment. (A foreclosure by any other name .. ) This raises the perverse aspect of Loveman trading away existing, wholly owned assets in order to pursue chimeras like a minority stake in a $1 billion racino at Suffolk Downs<\/strong> (above<\/em>). Quite a sense of priorities, no?<\/p>\n

S&G <\/em>has hammered for a good five years<\/strong> on the callous neglect Loveman has visited upon Caesars’ Strip properties. (Incidentally, a weekday recent drive-by of Linq<\/strong> found an impressive-looking trestle in place for the Ferris wheel, but no \"\"evidence of ongoing work.) Indeed, Fitch’s Michael Paladino<\/strong> writes, “concerns about weakening relative asset quality due to constrained capital reinvestment, more than offset the positive credit impact from recent transactions executed to push out its debt maturities meaningfully<\/em>.” In other words, Loveman has been Pennywise<\/strong> and pound-foolish. True, Horseshoe Casino Cincinnati<\/strong> continues apace for a 2013 opening, but Dan Gilbert<\/strong> is doing the heavy lifting and Caesars’ share of the anticipated lucre ($300 million\/year) is relatively paltry. Also, regional markets have been soft-to-weak at a time when Caesars really needs them to come on strong.<\/p>\n

\"\"Fitch’s dispatch send Caesars’ “cocktail party” stock — the Facebook<\/strong> of the gaming sector, peaking at $17.80\/share — into a Wednesday crash dive, bottoming out at $6.38\/share before eking out a rally all the way up to $7.20\/share. The company’s meager market cap isn’t helping matters, to be sure. A tailspin at the former Harrah’s Chester Downs<\/strong> (above<\/em>) — now Harrah’s Philadelphia<\/strong> — is also highlighted by Fitch as cause for alarm.<\/p>\n

Caesars’ private-equity bosses — Texas Pacific Group<\/strong> and Apollo (Mis)Managenement<\/strong> could arrange to loan money from the Caesars parent company to its subsidiaries, as was already done with a $220 million IRS<\/strong> refund. Fitch deems further, direct capital infusions from corporate raiders David Bonderman<\/strong> and Leon Black<\/strong> unlikely. On the bright side, Caesars needs only $130 million to finish Linq and fulfill its commitment to a Rock Gaming<\/strong> casino in Baltimore<\/strong>.<\/p>\n

When he went shopping Caesars around as an LBO prospect — a transaction in which he worked both sides of the street — Gary Loveman was looking for trouble. Congrats, Gary. You’ve found it … in spades.<\/p>\n","protected":false},"excerpt":{"rendered":"

When I said a Caesars Entertainment bankruptcy was a matter of when, not if, little idea did I have how soon that might be. Earlier this week, Fitch Ratings Service lowered Caesars’ bond rating to “negative,” a veritable kiss of … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[28,154,7,22,37,112,71,95,111,31,9,38,132],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/9595"}],"collection":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/comments?post=9595"}],"version-history":[{"count":1,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/9595\/revisions"}],"predecessor-version":[{"id":9597,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/9595\/revisions\/9597"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=9595"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=9595"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=9595"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}