Caesars plans IPO as owners prepare to sell

Caesars, based in Las Vegas, plans to sell 1.81 million shares at us$ 8 to us$ 10 apiece on February 6, according to a regulatory filing today and data compiled by Bloomberg. Existing shareholders plan to sell additional Caesars shares after the IPO, the filing shows.
The midpoint of the offering range gives Caesars an enterprise value of us$ 19.6 billion, or 9.2 times earnings before interest, taxes, depreciation and amortization in the 12 months through September 30, Bloomberg data show. That's less than competitors benefiting from casino growth in Asia. Wynn Resorts’ enterprise value is 11 times trailing 12-month Ebitda, and Las Vegas Sands is valued at 15 times, data show.

"They're creating liquidity for some of the existing stockholders," said Chris Snow, a senior analyst at New York- based CreditSights. "They don't have any gaming in Asia. What's happening in Macau is amazing levels of growth, and Caesars doesn't have any exposure to that."

The IPO's midpoint would value Caesars common stock at about us$ 1.1 billion and peg the enterprise value at 36 % less than the us$ 30.7 billion leveraged buyout that took the casino chain private in 2008.

Registered shares
Caesars plans to list on the Nasdaq Stock Market under the symbol CZR. Existing holders may sell as many as 22.3 million shares publicly or privately following the IPO, according to the filing. Caesars, led by Chief Executive Officer Gary Loveman, also disclosed that it registered to sell as much as us$ 500 million in shares beyond the offering.

Caesars, which operates more than 50 casinos including Harrah's, Caesars and Horseshoe, posted revenue of us$ 6.7 billion in the nine months ended September 30, according to the filing. More than three-quarters of that came from casino operations, with food and beverages, management and room fees making up the rest. The net loss over that period was us$ 467 million.

Betting is booming in Macau, the world's largest gambling market and the only part of China where casinos are legal, and has provided a windfall to Caesars' competitors including Wynn and Las Vegas Sands. Industry revenue there rose 25 percent in December, according the Gaming Inspection and Coordination Bureau. Gambling on the Las Vegas Strip gained 9 percent in November, extending an uneven recovery.

Year-old plan
Caesars, formerly known as Harrah's Entertainment Inc., announced plans for a $531 million IPO more than a year ago before pushing back the sale, citing market conditions. Harrah's went private in January 2008 in the largest casino buyout in history. The chain plans to use the proceeds from its offering for developing projects and maintaining properties.

The chain may see Ebitda decline to us$ 2 billion in 2012 from us$ 2.7 billion in 2007 before the buyout, CreditSights' Snow said. Ebtida for the 12 months through September 30 was us$ 2.1 billion, Bloomberg data show.

Apollo and TPG collectively own about 89 % of Caesars common stock, the filing shows. Hedge fund Paulson & Co. owns 9.9 % after agreeing in 2010 to acquire that stake by swapping bonds bought at a discount.

Credit Suisse Group AG and Citigroup are leading the offering for the chain.