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Article detailing CET debt and planned bankruptcy.

Discussion in 'Casino Industry & Development' started by Viva Las Vegas, Aug 3, 2013.

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  1. Viva Las Vegas

    Viva Las Vegas Ramblin' Gamblin' Man

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    Link

    Caesars Entertainment Corp. is working to improve its capital structure, but despite moves to cut costs, buy back debt and pursue a spinoff transaction during the second quarter, Caesars' $23.7 billion debt load is still the elephant in the room and could push them into Chapter 11.

    It's not just the size of the Las Vegas-based, private equity-backed casino operator's debt burden that is worrisome; substantial maturities in 2015 and 2016 are also a cause for concern.

    However, Caesars CEO Gary Loveman promised in a July 29 second-quarter earnings call that he is "acting aggressively to improve the company's capital structure."

    But debt investors aren't too optimistic. One hedge fund invested in Caesars' debt, which asked not to be named, said, "They would need a meteor to destroy the earth, or they'd need [PE owner] Apollo Global Management LLC to come in and buy billions of debt" to avoid filing for bankruptcy protection.
     
  2. shifter

    shifter Degenerate Gambler

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    Of course. Did anyone think it was going to end in any other way after the spin-off?
     
  3. Viva Las Vegas

    Viva Las Vegas Ramblin' Gamblin' Man

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    I did not think CET would survive without filing for bankruptcy before the spin-off announcement.

    Sheldon's the only one who guaranteed his debt and the subsequent stock move has paid off (In Macau We Trust).

    MGM is expected to post stronger results next week, and may make it without bankruptcy/debt reorg or further property sales (beyond TI and already announced portions of City Center). They may even be able to keep their share of Borgata, as no potential buyer stepped forward.
     
  4. egelston2

    egelston2 Low-Roller

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    CET has no assets in China. How Loveman has remained as CEO is beyond explanation.
     
  5. oc_guy

    oc_guy Low-Roller

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    BUT as soon as online poker is legalized in more and more states (already legal in NV, NJ, and DE) cashflows should improve significantly. CET has bought up a lot of online gaming sites and software the last few years, as well as having the WSOP brand. Online poker would be low cost + high margin, if not for political risk (who knows if/when the other states will legalize it. It's feasible they do an equity offering if need be that coincided with new beneficial legislation in the future.

    Their leverage ratio is nothing new. If it was "so obvious" CET was going bankrupt, their stock wouldn't be up 120% this year...
     
    Last edited: Aug 4, 2013
  6. leo21

    leo21 VIP Whale

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    It's too late for online gaming to save CET. I really don't take suggestions that they are trying to avoid bankruptcy seriously. It's seemed to me that they decided to run up all the credit cards before they went before a judge. The private equity partners do have the money to bail the company out and their management fees are part of what's killing the company. After Stations, I think folks figure they can go broke and still retain a lot of assets and until someone gets smacked down, we will see this happen again.
     
  7. Someone

    Someone High-Roller

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    all the worse considering back in 2006 or so Steve Wynn offered to sell CET one of his China concessions for about $800 million and they declined and later realizing the mistake they instead paid almost $600 million for a golf course with the mistaken belief that if they owned property it would be easier to get their own concession


    online gaming is just going to damage them further they can buy up all the crappy online sites they wish, but there will be a million competitors trying to get into that space and that does nothing to help with the thousands of employees they have, the new casinos they are trying to open, LINQ and on and on

    besides most people in the USA have such junked up and crap computers with so much garbage on them that their online gaming experience will consist of crash after crash right when they had the "big winner" and it is going to turn them off to gaming all together because they will just see it as rigged

    they will constantly be calling their internet service provider to yell at them for the crashes only to be told not our problem (and it isn't) and then having to wait a week or a month for their cash from their occasional big win instead of being able to hit the cash out button and have their printer spit out money so they can go buy alcohol or crack will drive them insane and further fuel the belief it is just a scam to hold their money and collect "interest' on it while holding it hostage

    casino companies have no idea how internet stupid and technology ignorant most Americans are or how demanding or what their expectations are going to be for internet gaming.....wait until they find out there is no service that swings by their house and brings them free drinks of their choice :eek::poke::rolleyes2:

    not to mention other issues with people blowing it all and then blaming it on the cat walking on the keyboard or the kids getting on the computer and wanting their money back and all the people that will be reading crap on the internet about how to cheat or scam and win 100%....then the whole "addiction" thing and I am not responsible for my addictive behaviors......internet gaming is going to be a disaster in so many ways
     
  8. Kickin

    Kickin Flea

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    Loveman has remained CEO because a CEO at a PE controlled company is more of a COO and advocate for the PE firms than he is an actual CEO. And Loveman is great at those roles. There's no reason for the PE guys to try and make bondholders whole. I bet the original indentures included covenant restrictions preventing them from spinning off parts of the company without bondholder approval or make-whole provisions. It's pretty standard and necessary to sell a new issue from a leveraged buyout. But what's also pretty standard for PE firms is to force through amendments to those provisions down the line, which I also bet happened. Probably at the peak of the credit crisis when everyone just wanted to prevent defaults and signed anything that promised them their next coupon was safe.

    At the end of the day the PE guys, CET mgmt execs, investment banks, and hedge funds (flipping the new issue, trading the basis, distressed buying) make a lot of money. The buy and hold bondholders get shafted. Those are largely your pension funds, endowments, retirement funds/traditional asset managers, etc. Basically anyone at the retail level.
     
    Last edited: Aug 4, 2013
  9. shifter

    shifter Degenerate Gambler

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    lol, do you really think you can count on the market to tell you anything? people were still buying Enron and Lehman Bros as they were spiraling into oblivion.
     
  10. oc_guy

    oc_guy Low-Roller

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    If you are arguing that CET is illegally hiding losses through tens of shell companies and lying about it whilst the executives sell their interests in undisclosed transactions, then I would agree with you. But it seemed people were saying that because of their debt, they have no choice but bankruptcy. Given the improving economy and attendance (interesting figure - Vegas revenues were up this quarter YOY, Macau's were down), in addition to a new cashflow stream from online gaming, I think they can produce enough cash to stay afloat.
     
  11. Someone

    Someone High-Roller

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    they have massive debt maturities coming due in 2014 and 2015, they are busy swapping out debt when they can from collateralized debt to non-collateralized debt and they still had an overall loss in the second quarter of this year and gambling was down a large %......and while food and beverage was up in Vegas it was flat for the company overall

    they LOST 212 million in 3 months and people can continue to spew the BS about people coming to Vegas (or AC or anywhere) to do things besides gamble, but Cosmo and Revel both prove that is just BS and both of those properties are making adjustments to go after gamblers and the type of people that participate in the "come to Vegas but not gamble" are the type of people that will be on to some new hot city and trend as soon as MTV Road Rules or Survivor or Top Chef host a show in some place "new fun and exciting" and Vegas will be stuck with a bunch of over priced and over hyped crap built to serve them

    many of the CRZ properties are getting stale and some are just old and dirty and they have a reputation for that.....The Quad, Flamingo now and the Rio is an example of what happens when the "young hip and cool" decide you are no longer young hip and cool and sure they are in with the "big time" Gavoorstrovooertsenser to redo Bills, but the truth of the matter is those people are chumps and their Miami property is long gone because it went broke and their "flagship" New York properties are where you go to feel like a sap that was separated from their money while being treated like a loser.....that type of property and operator will never come close to taking customers from Wynn or LVS and the best they can hope for is to take some from Cosmo which means hoards of people flopping in a room and putting 3 years worth of wear and tear on it in a year or less before they flock to the next "happening" place and trash it

    MGM might be able to pull out of it, but CZR is in terrible shape and not improving and they are already taking action to try and leave Apollo and TGP in better shape than the average share holders, but I doubt many bond holders are going to work with them from now into the future
     
    Last edited: Aug 8, 2013
  12. leo21

    leo21 VIP Whale

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    It's not really even about the product. When they had a chance to start paying off debt, they decided not to and to take on even more. They haven't stopped taking on debt. This is about poor management decisions, plain and simple. Whatever happens, Loveman needs to go.
     
  13. VegasBJ

    VegasBJ VIP Whale

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    another recent business article said that CZR plans to spinoff Planet Hollywood, and the online gaming business for $1.18 billion, helping the balance sheet some, but leaving it with no potential future growth, and a company with declining revenues. Spinning off Planet Hollywood, which is one of their nicer / newer / hipper properties leaves CZR with older, lower to middle level properties, which are the properties that are hurting now in Vegas. Wynn and LVS are posting increasing numbers due to a Macau presence, as well as having higher end properties (which the article states are doing better in LV at the moment).

    Hope posting the link is OK, if not, please remove

    http://www.dailyfinance.com/2013/07/30/czr-earnings/
     
  14. Patripman

    Patripman Low-Roller

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    CET bankruptcy ????

    Has anyone else heard anything about this??


    3 September 2013

    The publisher of a newsletter about Las Vegas is encouraging readers not to put money down on hotel reservations or make deposits in casinos operated by Caesars Entertainment, citing the prospect of a bankruptcy filing.

    “In an abundance of caution, this newsletter advises you not to deposit any funds (deposits for hotel reservations, deposits in the cashier’s cage or not redeeming casino chips, etc.), in … Caesars hotels, until the situation at Caesars becomes clearer,” Publisher Bill Mandel said in his Openings and Closings in Las Vegas newsletter distributed Monday.

    While analysts have speculated on a Caesars bankruptcy filing, company insiders said executives aren’t considering it.
     
  15. dankyone

    dankyone VIP Whale

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    Company insiders will deny anything like a bankruptcy up until the moment it happens. Analysts seem to believe a CET bankruptcy is inevitable at this point, just a question of timing. Operations should continue as usual, but "out of an abundance of caution" I wouldn't want to have cash on deposit in one of their cages when it happened!
     
  16. M0rtyC

    M0rtyC Low-Roller

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    I've stayed with CET for years but switched over to Boyds this year. I don't trust Loveman at all. He has Menino and Boston hoodwinked with the CET proposal for a casino at Suffolk Downs. CET has too many pots on the fire with no fuel ($$$$) from Macau.
    Resort fee grab in the face of 2 year "no resort fee" campaign is the final gasp for air from road kill.
     
    Annual end of the rodeo trip
  17. oc_guy

    oc_guy Low-Roller

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    To reiterate what some people have said, when a company like Caesars files for bankruptcy, they don't hire a swat team, kick everyone out, and weld the doors shut. :rolleyes2:
     
  18. Film-Noir

    Film-Noir High-Roller

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    Nice

    Nice,

    We didn't spend a Penny in any CET Casino's our last Trip in August.

    It's about time this Zombie Company was put out of it's Misery.
     
  19. NickyDim

    NickyDim VIP Whale

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    This zombie company gives me free rooms/food/entertainment whenever I want in Vegas and Atlantic City. Why would I not want to patronize these establishments? Do I want to see Caesars/Ballys/Flamingo close it's doors? Hopefully they will reorganize without their current CEO and they'll get their act together.
     
  20. shifter

    shifter Degenerate Gambler

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    they gives rooms out to every tom, dick and harry that walks in there with $20 in their pocket. they treat real players like total crap offering them hardly anything. their hotels by and large are all rundown flea motels. they dumped how much into a huge ferris wheel in the middle of the strip. they have no presence in Macau, far and away the biggest gambling destination in the world and growing exponentially.

    bankruptcy?! how could that ever happen??!!
     
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