Still, with $1.9 billion in liquidity as of June 30 and under-construction projects such as its Linq shopping and entertainment strip in Vegas still requiring hefty capital expenditures, Caesars needs a more proactive approach to address its upcoming maturities.
For now, the company is focusing all of its restructuring efforts on spinning out a new entity, Caesars Growth Partners, which will include Caesars' online gaming properties, its Horseshoe Baltimore casino and Planet Hollywood Resort & Casino in Las Vegas, along with an infusion of $1.2 billion from existing shareholders, which will include $500 million from its majority owners Apollo and TPG Capital.
The spin-off will give Caesars a vehicle for growth--the gaming market is highly competitive, and requires substantial capital expenditures to keep up properties--but it doesn't help the company pay down its debt. Growth Partners will be a separate corporate entity from the operating company and the unit that owns the properties, and it will have a more attractive leverage profile.
Caesars' existing units are steeply levered: The operating company has a leverage ratio of 12.96, while the property-owning unit is levered at 10.4 times, according to Fitch.Still, the Growth Partners transaction leaves the operating company's creditors out in the cold. "They've tried to maneuver assets away from the
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