CET Bankruptcy Investigation

Just read this story on MSN.
Everyone knew they were running a financial shell game, now it looks like they will have to pay the piper!
Actually as consumers we will be the ones paying.
Expect even more cost cutting, revenue enhancements and lower comps.



http://www.msn.com/en-us/money/companies/caesars-could-face-dollar5-billion-hit-from-units-bankruptcy-examiner/ar-BBqw2TM?li=BBnbfcL

 

This just means Jr. creditors will get a better position at the bargaining table and the equity partnerships will take a bigger loss. Given the money they have made on the bull market the past few years in other funds, its not going to turn off their lights.
We will see how this plays out when CET comes up with their new plan, although given the way things have been going, I can't imagine they don't already have a contingency plan. I wonder if we will see any civil suits for fiduciary irresponsibility.

 

Doesn't work that way.

You might get more of each of those, but not because of the settlement (with the possible except of the cost cutting if they end up cash strapped).

Businesses charge what they can. If CET could make 5 billion more through those measures, they would not hold off until they owed 5 billion, they would do them anyway. Plus, you can bet that they have been planning based on what happens if these rulings go against them for some time.

 

I'd also like to think that comps and free play offers enhance incremental foot traffic. I think they might begin by lowering the odds on our behalf, but I feel like the comps will still be there (though maybe a little less so for lower tier players).

 

This report is not a binding, but I'm sure it will speed up the negotiations between Apollo/TPG and the creditors. Caesars wants to go the way of MGM and Penn Gaming to split into a REIT to own the properties and an operating company to manage the casino. I'm glad that the bankruptcy judge commissioned this report, its findings are an embarrassment to the owners and management of Caesars.

If you read Caesars recent earnings call transcript, they are doing better in Vegas, room rates and revenue is up to pre-recession levels. They also mention reduced promotional spending. Like any business, why give it away when you don't have to?

 

Hmmmm, might be a good time to buy CZR....

 

Why is that?

 

I've been buying CZR on the dips for about a year. It's down over 10% today, I bought more shares at $6.15 a couple of hours ago. If you aren't looking for a quick turnaround I think this is a good investment.

 

If only I had the capital. I'm paying for a wedding, so I can afford about ten shares. Haha.

 

You should use Robinhood. NO commissions (buying or selling). You could buy a share at a time if you wished

 

I'll look into it. Thanks!

 

So if it's down to around $6.70 a share, then what could be a realistic return on that? Are they restructuring or doing anything else to increase revenue and pay off creditors?

 

Exactly! I've been buying on swings a lot lately. Priceline dipped to 900 something is back up to 1300 and that's within a single month.

 

I would hope you are using your gambling money to buy CZR. Shareholders are the last to get paid...if there is anything left. The equity partners and Sr bondholders have the deck stacked..that's why the Jr bondholders filed the lawsuit. None of these 3 care about shareholders and these are not dumb people.

 

CZR is caesars entertainment, though. That is not the unit in bankruptcy, AFAIK.

It is the operating company in bankruptcy. CZR may have to pay $5B based on this finding and various lawsuits, but unless that puts CZR itself into bankrupcy there is no concern about CZR shareholders getting paid.

 

Yeah, I think CEOC is the one who's in bankruptcy proceedings as far as I know.

 

Some of the junior bondholders believe CZR should already be in bankruptcy because of the asset moving. Plus, now they are warning if they lose some of these judgements, CZR will be definitely be in bankruptcy. There have to be better plays than fooling around with this stock.

This article seems to break down the findings more clearly:

http://www.bizjournals.com/newyork/news/2016/03/16/how-apollo-and-tpgs-plan-for-saving-caesars.html

Hopefully everyone can access it. I don't know what the future holds but this mess keeps getting worse.

 

You're right -- hey're are definitely better plays. After doing some more digging, I'm definitely a bear on this one.

 

The best thing for us, the customers, is to have the whole mess concluded as soon as possible. If this report forces CET to settle, rather than continue fighting in court, then it's terrific.

I understand the thought that if CET is on the hook for $billions, then we're the ones who will end up paying for it via higher costs, more fees, etc. But in actuality, the finalization of the bankruptcy will leave the properties with owners who are financially solvent (which may or may not be Caesars) and not ultra-deep in debt. The owners who emerge will be in far less of a panic and debt-ridden stranglehold than CET has been for the past 7 years.

 

Well, the owners will emerge debt free but they will be the same owners who created the debt in the first place. I don't know if we are better off as customers or not to have this over.