Not enough income to pay expenses
Caesars Entertainment Corp. will sell 7 million shares of common stock, for a total value of about $147.6 million. The plan, which is part of Caesars’ debt restructuring initiative, could be followed by the sale of an addition 1.05 million shares, according to a statement from the company.
Share values in the United States dropped 6 percent after the announcement of the sale, according to Bloomberg. It has risen 31 percent in the past year.
Since a leveraged buyout in 2008, Caesars has been struggling to pay down a record level of long-term debt totaling $23 billion. The company has sold stock to the public, divested its assets, bought back debt and restructured loans. It has also spun off a number of its resort properties to subsidiaries, a strategy that has met with some pushback from debt holders.
Most recently, the company’s affiliate, Caesars Growth Partners, sought to raise $2 billion to purchase four casinos from Caesars Entertainment Operating Co., which carries the bulk of the debt. Caesars heard from a law firm challenging that and other asset transfers.
The company also announced March 26 that it will close its Harrah’s Tunica casino in Mississippi in the face of increased regional competition and declining revenue. Caesars faces additional challenges on its home turf in Las Vegas, where gaming revenue fell by one-fifth last month.
The company, controlled by Apollo Global Management LLC and TPG Capital, is the largest owner of casinos in the U.S. Apollo and TPG have agreed not to sell any of their holdings for about 60 days after the offering. Citigroup Inc. is the sole underwriter.