Caesars weighs closing Atlantic City Casinos

Caesars has been struggling to remain solvent amid a glut of casinos and weak consumer spending, following a 2008 leveraged buyout that left the company with about US$ 23 billion in debt. The company said in March it would close a property in Tunica, Mississippi. That move may set a precedent for other markets like Atlantic City, Loveman said. “These markets can reach points when no new supply is indeed the right answer,” Loveman said. “In some cases reducing supply is the right answer.”

The company owns four casinos in Atlantic City - Caesars, Bally’s, Harrah’s and Showboat. Loveman didn’t say specifically that a casino would close. The company has already taken steps to cut costs, such as reducing restaurant hours, according to a spokesman.

Las Vegas-based Caesars, the largest owner of casinos in the U.S., reported yesterday that its loss first-quarter widened to US$ 386.4 million from US$ 217.6 million in the same period last year. Sales fell 1.9 percent to US$ 2.1 billion due to continued weakness in the U.S. midwest and Atlantic coast.

Lender Guarantees
On May 6 the company announced a debt refinancing and sale of a 5 percent interest in Caesars Entertainment Operating Co., its largest unit. Caesars removed guarantees by the parent company on a large portion of its borrowings, a move that sets the stage for broader negotiations with creditors. The shares rose 14 percent to US$ 21.18 at the close in New York yesterday, the biggest gain since April 2013. They are down 1.7 percent this year.

The closely held Atlantic Club, formerly the Atlantic City Hilton, closed in January, a trend Loveman expects to continue. “That’s the normal, self-correcting healing that you’d like to see in a market like this,” he said.