Caesars Entertainment, the largest owner of casinos in the United States, is selling four properties to an affiliate it controls for US$2.2 billion, freeing up cash as the company works to restructure $24.5 billion in debt.
Bloomberg reports that Caesars (NasdaqGS: CZR) is selling the Bally’s, Quad and Cromwell properties in Las Vegas, together with Harrah’s New Orleans, to Caesars Growth Partners. As part of the deal, Caesars Growth agreed to spend $223 million to complete renovation of the Quad, formerly known at the Imperial Palace, on the Las Vegas Strip.
The transaction leaves Caesars Entertainment Operating Co., the company’s largest subsidiary, with more than $3 billion in cash, some of which will be used to reduce debt.
“We have a lot of latitude in how proceeds of this magnitude will be spent,” Chief Executive Officer Gary Loveman said on a call with investors and analysts.
Private equity giants Apollo Global Management and TPG Capital acquired the company, then known as Harrah’s Entertainment, in a $30.7 billion buyout in 2008, just as the financial crisis gripped its principal markets in Las Vegas and Atlantic City. Caesars has since sold assets, bought back debt at a discount, refinanced loans and sold stock in an attempt to dig out.
Caesars Growth Partners was created last year to facilitate this effort. The parent company owns 58% of Caesars Growth, which also holds the company’s online gambling operations and the Planet Hollywood casino in Las Vegas. The remaining 42% is owned by Caesars Acquisition Co. (NasdaqGS: CACQ), a publicly traded entity created last year through a $1.17 billion rights offering to Caesars shareholders.
