This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Caesars Launches Massive Refinancing

NEW YORK ( The Deal) -- Caesars Entertainment (CZR - Get Report) has launched an initiative to refinance a total of $4.85 billion in debt, giving bondholders in its property unit a better-than-expected deal.

Under the refinancing plan, holders of $4.4 billion in commercial mortgage-backed securities (CMBS) will receive $0.99 on the dollar plus accrued and unpaid interest while holders of $450 million in mezzanine debt will receive $0.90 on the dollar plus accrued and unpaid interest, according to a Sept. 17 statement.

Private equity-backed Caesars is sweetening the deal for new debt holders by throwing in its Octavius Tower and Linq assets--Las Vegas properties from its Caesars Operating Co. unit--as security on their loans.

To fund the refinancing, the Las Vegas-based casino and hotel operator plans to issue a $3 billion term loan, a $269.5 million revolving credit facility, $500 million in first-lien notes, and $1.35 billion in second-lien notes.

Caesars hasn't released information about the pricing of these new loans, but a bondholder in the property company said in a Sept. 18 interview that the company plans to price the first-lien loan at Libor plus 550 basis points with a 1% floor and a 99 offer price.

The casino operator hopes to price its $500 million in first-lien notes at 7% and its $1.35 billion in second-lien notes at 9.5% to 10%, the source added.

He thinks a 7% coupon for the first liens makes sense, but 9.5% to 10% seems too low for the second-lien notes. He believes 11% would be more reasonable, although the company may be able to swing a lower coupon price due to investors' hunger for yield.

The main point of this refinancing isn't to reduce Caesars' staggering debt load of $23.5 billion, as the discounts on the buyback are mild. The primary focus would be the elimination of worrisome debt maturities in 2015. This refi would give Caesars more time to work out a comprehensive restructuring to tackle its debt problem.

Now that the property company refinancing is underway, "All eyes are on the disaster at OpCo [Caesars Operating Co.]," the bondholder said.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CZR $6.80 0.74%
AAPL $92.99 -0.67%
FB $117.88 -0.15%
GOOG $700.35 0.67%
TSLA $212.32 -4.60%


Chart of I:DJI
DOW 17,641.98 -9.28 -0.05%
S&P 500 2,049.49 -1.63 -0.08%
NASDAQ 4,721.0070 -4.6320 -0.10%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs