Caesars Entertainment To Sell Four Casinos To Affiliate For $2.2 Bln

(RTTNews) - Casino giant Caesars Entertainment Corp. (CZR) said Monday that it has agreed to sell four casinos to its affiliate Caesars Growth Partners, LLC for $2.2 billion. The deal includes assumed debt of $185 million and committed project capital expenditures of $223 million, resulting in a cash consideration of about $1.8 billion.

Under the deal, Caesars Growth Partners will acquire three Las Vegas properties - Bally's Las Vegas, the Cromwell (formerly Bill's Gamblin' Hall & Saloon), and the Quad Resort & Casino - as well as Harrah's New Orleans from Caesars Entertainment. The transaction is expected to close in the second quarter of 2014.

Caesars Acquisition or CAC (CACQ) is the managing member of Caesars Growth Partners and holds a 42 percent stake in the unit, while Caesars Entertainment owns the remaining 58 percent stake.

CAC noted that the transaction will facilitate new investment in these four properties, some of which require considerable capital expenditures to realize their full potential. With this transaction, CAC also announced a $223 million renovation of the Quad Resort & Casino.

Mitch Garber, chief executive officer of CAC said, "These four properties will strongly complement our existing portfolio, particularly Planet Hollywood and our interest in Horseshoe Baltimore, which will open later this year."

According to Caesars Entertainment, the sale represents first of its anticipated steps to address overall capital structure at its subsidiary, Caesars Entertainment Operating Company, Inc. or COEC, and position that unit to enhance equity value. Caesars Entertainment is working to restructure more than $20 billion in debt.

On a pro forma basis for this transaction, CEOC will have in excess of $3.2 billion in cash as of December 31, 2013. CEOC will also be relieved of potential capital expenditure requirements for the purchased properties and intends to use a portion of the proceeds from the asset sales to reduce bank debt.

Caesars Entertainment and its affiliated companies will manage the purchased properties, allowing continued integration with the Total Rewards network and related synergies.

In connection with the management of Bally's Las Vegas, Cromwell, Quad, and Harrah's New Orleans, Caesars Growth Partners will retain a 50 percent stake in the management fee revenues to be received by certain subsidiaries of CEOC.

In a separate statement, Caesars Entertainment announced preliminary results for the fourth quarter of 2013 that include consolidated results for Caesars Growth Partners.

For the fourth quarter, the company forecasts net loss between $1.70 billion and $1.82 billion and consolidated net revenue in a range of about $2.05 billion to $2.11 billion. This compares to net loss of $480.3 million for the quarter ended December 31, 2012.

On average, analysts polled by Thomson Reuters expected the company to report loss of $1.49 per share for the quarter on revenues of $2.12 billion.

Caesars Entertainment said it expects consolidated net revenues for the quarter to increase slightly as compared to the prior year.

The increase is primarily due to the combination of increases in pass-through reimbursable management costs, growth at Caesars Interactive Entertainment, and declines in promotional allowance. These are expected to be offset by lower casino revenue.

Caesars Entertainment expects to report its financial results for the quarter and full-year ended December 31, 2013 in March.

In Monday's regular session, CZR is trading at $25.45, down $0.51 or 1.96 percent on a volume of 49,404 shares.

CACQ is trading at $13.63, down $0.12 or 0.87 percent on a volume of 8954 shares.