LAS VEGAS -- Caesars Entertainment Corporation continued its efforts to address its gaming industry-high $23 billion in long-term debt Wednesday by installing separate management in one of the company’s operating entities with the intention for a public listing of the business.
The effort is part of an overall restructuring plan announced in May that eliminated more than $1 billion in debt that was due next year while providing a different ownership structure to pieces of the company. The company recently raised $1.75 billion in new debt associated with 2015 debt retirement, as well paying down $800 million of debt due in 2016.
Wednesday’s announcement involves Caesars Entertainment Operation Co. (CEOC), which operates 44 casino properties in 13 states — the largest chunk of the company’s operating divisions. CEOC owns Caesars Palace, Caesars Atlantic City, Harrah’s Reno Casino and Hotel, and much of the company’s regional properties.
Casinos and properties held under CEOC owe roughly 80 percent of the company’s overall debt.
The company named long-time Caesars executive John Payne as CEO and, Mary Elizabeth Higgins as CFO and Tim Lambert as general counsel for CEOC. In May, the company sold 5 percent of the equity in CEOC to institutional investors. Parent company Caesars Entertainment retains 95 percent ownership in CEOC.
Caesars also appointed two independent directors to the seven-member CEOC board.
A financial source close to Caesars but not authorized to speak about the announcement, said the company will take its time to determine when it will list shares in CEOC. Caesars could offer creditors stock in the division as part of a financial restructuring.
“We are focused on deleveraging and creating value at CEOC and today’s announcement supports those goals,” Caesars Chairman Gary Loveman said in a statement.
Much of Caesars debt came from the company’s 2008 private equity buyout.
Caesars other major operating division is Caesars Growth Partners, which is publicly traded on the Nasdaq as Caesars Acquisition Co. The business, which is 57 percent owned by Caesars Entertainment, includes The Cromwell, The Quad, Bally’s Las Vegas, Planet Hollywood, Harrah’s New Orleans, a 41 percent interest in Horseshoe Baltimore and Caesars Interactive Entertainment.
Caesars Acquisition closed at $11.60 Wednesday, down 4 cents or 0.34 percent.
Caesars Entertainment Corp. is publicly traded on the New York Stock Exchange. Shares of the company closed at $16.45 Wednesday, up 20 cents or 1.23 percent.
The company also operates eight resorts and the Octavious Tower at Caesars Palace under Caesars Entertainment Resort Properties division, including the Rio, Flamingo, Paris Las Vegas, the Harrah’s resorts in Las Vegas, Laughlin and Atlantic City and the Linq development.
Payne has been with Caesars for 19 years, most recently is several corporate area positions. He once headed the company’s Central Division and was general manager of several company properties, including Harrah’s New Orleans. Higgins previously served as the CFO of Global Cash Access and was CFO of Herbst Gaming.
Payne said the company sees value in its regional properties.
“Despite difficult conditions in some regional markets, I believe there are exciting opportunities to enhance value and capitalize on a number of exciting developments across the industry,” Payne said.
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