Caesars Entertainment in danger of bankruptcy

caesarsCasino and leisure operator Caesars Entertainment has entered talks with creditors to create a financial restructuring plan in order to ease its debt burdens which exceed $24 billion (£15.4 billion).

In its last quarter financial earnings report the casino operator recorded net losses of $900 million (£570 million), even though it had managed to grow revenues 6% to $2.21 billion.

Caesars Entertainment raised investor concerns when the debt-strapped casino operator received a second default notice on debt repayments. US news reports had stated that the Caesars Entertainment could enter voluntary bankruptcy for select business units as early as January 2015.

The company has struggled since its 2008 leveraged buyout by TPG Capital and Leon Black Apollo GM to repay interest expenses on its debt load. Bloomberg News reported that it had been further with increased interest rate repayments and on-going accumulation of bad debt.

Caesars Entertainment governance is negotiating its first line bondholders which includes Pacific Investment Management and Elliot Management Corp. Bloomberg News reported that Caesars has requested that the bondholders cover $18 billion of its debts of its total debt.

The company has begun to undertake a corporate re-structuring policy which it hopes will generate between $250 to $300 million in cash flow, by outlining savings through operational reductions such as staff layoffs and casino closures. This has been very well received by the stockmarket with share price jumping 18%.

Caesars has three operating units that have been set up through various restructuring efforts. Caesars Entertainment Operation Co., own the largest portion of the company’s operating divisions, including Caesars Palace, Caesars Atlantic City, Harrah’s Reno and many of the company’s regional properties.

Casinos and properties held under Caesars Entertainment Operation owe about 80 percent of the company’s overall debt.

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