LAS VEGAS — Caesars Entertainment Corp. (NASDAQ: CZR) has agreed to sell Bally’s Las Vegas, The Cromwell, The Quad and Harrah’s New Orleans to Caesars Growth Partners LLC for $2.2 billion. The transaction, which is expected to close in the second quarter of this year, includes assumed debt of $185 million and committed project capital expenditures of $223 million.
The sale is part of Caesar Entertainment Corp.’s repositioning of its three primary structures: Caesars Growth Partners, Caesars Entertainment Operating Co. Inc. (CEOC) and the six-property Caesars Entertainment Resort Properties (CERP) portfolio.
“[These] asset sales mark an important step in our ongoing efforts to repair CEOC’s balance sheet,” says Gary Loveman, chairman and CEO of Caesars Entertainment. “Caesars Entertainment and Caesars Acquisition Co. [the managing member of Caesars Growth Partners] have a combined equity market capitalization of more than $5 billion. To build equity value, we have employed a full complement of operating and financial tools.
“The company expects to deploy a similar array of tools to improve CEOC’s financial position and build additional equity value.”
Bally’s Las Vegas, located on Las Vegas Boulevard, totals 2,810 rooms and suites and features a 66,200-square-foot casino. The Quad, also on Las Vegas Boulevard, includes 2,540 rooms and suites and houses a 32,800-square-foot casino.
The Cromwell, formerly known as Bill’s Gamblin’ Hall & Saloon, is located less than a block back from Las Vegas Boulevard and offers 200 rooms and suites and a 19,800-square-foot casino. Harrah’s New Orleans, one of two Caesars properties in Louisiana, comprises 450 rooms and suites and a 125,100-square-foot casino.
Caesars Entertainment and its affiliated companies will continue to manage the properties. As part of the deal, Caesars Growth Partners will invest $223 million in a renovation of The Quad.
A joint venture between Caesars Entertainment and Caesars Acquisition Co., Caesars Growth Partners owns Caesars Interactive Entertainment Inc., the Caesars brand’s online, mobile and social gaming company; the Planet Hollywood Resort in Las Vegas; and a 41 percent interest in the Horseshoe Baltimore Casino.
CEOC, which owns a portion of the overall Caesars Entertainment portfolio of land-based casinos, is the brand’s operations arm. Investment website Seeking Alpha reported that the subsidiary was responsible for more than $20 billion of Caesars Entertainment’s debt obligations.
The original Caesars Entertainment Inc. merged with Harrah’s Entertainment Inc. in 2005, which in 2006 was acquired by private equity firms for more than $15 billion. The company remained private through a name change to Caesars Entertainment Corp. in 2010.
After a large initial public offering fell through in late 2010, Caesars Entertainment Corp. successfully went public with a smaller offering in 2012. The company’s stock price closed at $25.59 per share on March 3, up from $12.51 per share a year ago.
— John McCurdy