Caesars rises on plan to sell stake in online unit and new casinos

(US).- The largest owner of U.S. casinos, Caesars Entertainment, rose the most in almost two months after saying it may raise money by selling a stake in its online operation and two other properties.

2013-02-05

United States

Reading time 1:32 min

(US).- The largest owner of U.S. casinos, Caesars Entertainment, rose the most in almost two months after saying it may raise money by selling a stake in its online operation and two other properties.

Caesars Growth Venture Partners will include Caesars Interactive Entertainment shares, the Planet Hollywood resort in Las Vegas and a project under way in Baltimore, the Las Vegas- based company said in a filing. The unit will assume us$ 1.1 billion in debt.

Caesars Entertainment, controlled by Apollo Global Management and TPG Capital, said the sale may bolster its cash and improve its credit rating. The parent, with almost us$ 23 billion in debt, will keep a “significant portion” of the venture, according to the filing. The announcement was made in conjunction with a debt offering. “We are pursuing this transaction because we believe it will improve our liquidity and credit profile, enhance our distribution network and provide additional support for potential new ventures,” the company said in the filing.

Caesars rose 7.4 percent to us$ 8.39 in New York after reaching us$ 8.56 to market the biggest gain since December 6. As of February 1, the shares had gained 13 percent this year. Apollo Management and TPG Capital own about 70 percent of Caesars stock. Paulson & Co. holds about 10 percent.

In the filing, Caesars proposed selling us$ 1.5 billion in senior notes, due in 2020, at a 9 percent rate. Proceeds will be used to repay outstanding term loans, the company said.
As part of the filing, the company also reported preliminary fourth-quarter results.

Quarterly Results

Sales for Caesars Entertainment Operating Co. totaled us$ 1.55 billion to us$ 1.58 billion, the company said in the filing. Earnings before interest, taxes, depreciation and amortization totaled us$ 325 million to us$ 365 million.

The results topped estimates of us$ 1.52 billion and us$ 315 million by Barbara Cappaert, an analyst with KDP Investment Advisors, and came as Caesars’ Atlantic City casinos closed for five days during Hurricane Sandy last year.

Caesars sold shares to the public in February 2012 at us$ 9 each. The company was taken private in a us$ 30.7 billion leveraged buyout in 2008 by Apollo Global Management and TPG Capital in 2008.