Caesars Faces Mounting Debt
Caesars Entertainment Corp. is reaching unprecedented levels of debt. The company has $23.5 billion in long-term debt, much of it the result of the company going private in a $30.1 billion buyout by Apollo Global Management and TPG Capital in 2008.Since the recession the company has been suffering from reduced attendance, particularly in Las Vegas where it owns 10 resorts and in Atlantic City where it operates 3 of the city’s 12 casinos.
Last year the company collected revenue of almost $8.6 billion, however, it suffered a net loss of $1.5 billion. Earlier this year Moody’s Investor Service called Caesars’ debt “unsustainable”.
However, Caesars Deputy General Counsel, Michael Cohen, said that the company thinks the debt is “manageable”.
Caesars managed to make the debt a little more controllable by raising $1.18 billion by placing ownership of Planet Hollywood Resort, Caesars’ interactive gaming division and a Baltimore casino into a new publicly traded holding company.
The real money-makers for Caesars are its social and mobile casino games offered through Playtika and Buffalo Studios. Last year’s interactive revenues were $193.3 million and it is estimated to reach $283 million this year. However, it remains to be seen if this will enable the company to drag itself out of debt.