Caesars Palace Bankrupt: Vegas Casino Company Files for Bankruptcy
The main operating division of Caesars Entertainment has filed for bankruptcy in a bid to restructure the company.
The move leaves a judge to settle the dispute between the company’s creditors and the investment firms whose buyout left the unit with $18.4 billion in debt, reported the Wall Street Journal.
Caesars was once the world’s largest gambling company, but suffered significant losses in the wake of a leveraged buyout in 2008.
Among the 18 properties included in the bankruptcy filings are the Caesars Palace Las Vegas, two casinos in Atlantic City, New Jersey and a dozen smaller casinos across the country.
Caesars has struggled with massive debt for years but starts a restructuring attempt with the bankruptcy filing.
If the plan is instituted, it would slash the operating division’s $18.4 billion debt down to about $8.4 billion, reported Vegas Inc. The division is called Caesars Entertainment Operating Co., or CEOC.
“We believe this restructuring is in the best interests of all of CEOC’s stakeholders and will result in a sustainable capital structure for CEOC and value creation for all stakeholders,” said Caesars CEO Gary Loveman in a press release announcing the filing.
“The restructuring of CEOC is the culmination of a years-long effort to improve the health of CEOC’s balance sheet, which has included substantial investment in new and upgraded assets, especially in Las Vegas. I am very confident in the future prospects of our enterprise, which will combine an improved capital structure with a network of profitable properties.”
The company emphasized in a statement that all properties will continue to operate, and no performances or other activities will be canceled.
The next step is a judge deciding in which venue the bankruptcy proceedings take place. Caesars hopes the judge will choose Illinois while some creditors are aiming for Delaware.
The Motley Fool said back when the plan was first announced that the bankruptcy filing could be “as big as a tidal wave” in terms of impact on the Las Vegas Strip.
“There may be minimal short-term impact felt if creditors who Caesars owe money agree to restructure debt, take equity in the company, and don’t force a protracted negotiation. But tensions between debt holders and Caesars are heating up and they may force a more complete breakdown of the company,” it said.
“If Caesars is forced to break up into smaller pieces or sell off assets we could see a reshaping of The Strip. We could see valuable assets sold to rivals with strong balance sheets and underperforming assets could be sold to someone looking to demolish them for a new megaresort.
“A bankruptcy of Caesars Entertainment could bring a wave of change to the Las Vegas Strip but no matter what happens the heart of The Strip will likely change forever. Caesars can’t keep its business afloat with $25 billion of debt and by the end of 2015 the company will likely look very different than it does today.”