Caesars Entertainment returned to profitability in the third quarter, adding momentum to the planned completion of a multibillion-dollar Chapter 11 reorganization of its largest casino operating company.
Net income was $5 million in the quarter, compared to a net loss of $756 million in the third quarter of 2015 as revenues increased 3 percent year on year to $986 million, a gain the company attributed to strong growth in its Las Vegas market.
Adjusted EBITDA grew 9.3 percent to $269 million.
The average daily room rate in Las Vegas was up 10.6 percent due to increased resort fees, effective hotel yield management and improved pricing power due to room product enhancements, the company said.
The company completed the remodeling of 949 rooms and suites in the Augustus tower at Caesars Palace in July and at that time began the makeover of 1,166 rooms and suites at Paris Las Vegas with completion expected by the end of the year. The company also began upgrading 2,240 rooms and suites at Planet Hollywood in September and is expected to complete that project by mid-2017.
The increase in net income was largely due to a $4.2 billion pre-tax gain on the sale of the Caesars Interactive Entertainment social and mobile games subsidiary, partially offset by an accrual of $3 billion related to the restructuring of Caesars Entertainment Operating Co., which has been under Chapter 11 protection since January 2015.
The September sale of CIE for $4.4 billion in cash proved instrumental to Caesars’ ability to reach a settlement with CEOC’s creditors
The settlement calls for CEOC to emerge from Chapter 11 protection as two companies: a casino and hotel management entity and a REIT to own the casino and hotel assets, both in the control of creditors, who also will receive stock in a new group Caesars will create by merging with another affiliate, Caesars Acquisition Co.
If the plan wins U.S. Bankruptcy Court approval at a trial set for January, CEOC must have at least $1.8 billion in new financing for the REIT and $1.2 billion for the operating company before the reorganization can become effective. The company is in the process now of raising up to $3.8 billion to fund the plan.
Caesars Entertainment has promised to contribute another $5 billion to the reorganization.
