Casino Capitalism and Insolvency

Folks, the Bubble has burst! It's over!

The inflated revenues and phony job figures will prevent even the capital markets from investing in SLOT BARNS, even in virgin territory.

Fini!


Caesars selling properties to raise $500 million
By JOSH KOSMAN
February 9, 2012

Caesars Entertainment shares soared 71 percent in their debut yesterday — but quietly, behind the glitz, America’s largest casino chain is selling some properties to raise $500 million, The Post has learned.

Caesars is auctioning its Midwest River casinos and will use the cash to invest in new projects — like a Massachusetts casino, two sources close to the situation said.

Non-binding bids are being accepted this week, the sources said.

A Caesars lender, unaware of the sale until alerted by a reporter, said,“I would find that to be a big, big departure from their stated plans.”


Indeed, money-losing Caesars said in its marketing effort that one of the casino’s advantages is that customers can use reward points at any of its 52 casinos.

The 10 properties that Caesars, formerly known as Harrah’s, is considering selling include Harrah’s in Illinois, Indiana, Iowa, Louisiana and Mississippi.

Caesars is not the only large casino struggling to finance expansion plans.

The Mohegan Tribal Gaming Authority is trying to refinance debt by using its Mohegan Sun casino, the country’s second-biggest casino, as collateral — even though it sits on tribal land, according to Covenant Review, a bond research provider.

Such an undertaking would mark the first time an Indian tribe operating a casino on tribal land made such a move. It is unclear if Washington would allow it.

If the MTGA does not succeed in getting lenders holding 90 percent of $250 million in debt to swap for new notes with a later maturity, with the casino as collateral, it could default as soon as next month.

That would make it hard for the MTGA to raise the cash needed to complete expansion plans — including bidding on a new Massachusetts casino.

Caesars is not facing immediate collapse, but its debt problems are no less severe than what the MTGA faces.

Today, Caesars is expected to complete a $1.25 billion bond offering. It will use $1 billion of the proceeds to pay down $5 billion in loans due 2015.

With the $1 billion payment, the lenders will agree to extend the maturity on $2.5 billion of the remaining debt to 2018 — while jacking up the interest rate by 2.25 percentage points.

The higher interest payments will cost Caesars $100 million a year.

Overall, Caesars owes $19.6 billion.

Fortunately, Caesars has about $2 billion of liquidity, and no significant debt payments until 2015.

Caesars, even though it only sold 16.3 million shares in the IPO, now has the ability to trade debt for equity and reduce its loans, perhaps in the next six months, sources said.

Private-equity firms Apollo Management and TPG Capital bought Caesars in a $28 billion leveraged buyout in 2008.

Casinos jacked up their borrowings during the credit boom in the belief that Las Vegas, which had never had a down year, never would. But the recession caused gaming revenues to fall in 2008 and 2009.

A Caesars spokesman declined to comment. Mohegan Sun and government officials did not return calls.



Read more: http://www.nypost.com/p/news/business/rolling_the_dice_h9p5omq8lR3tnpJ3ortUsN#ixzz1pJ4Hbffy