Caesars Entertainment Corp’s largest division won’t have enough money to repay its debts by the fourth quarter of 2015 if it can’t restructure its obligations through creditor negotiations or bankruptcy, the Las Vegas-based gaming company said in a regulatory filing.
For the first nine months of this year, Caesars Entertainment Operating Co. spent $550 million and expects negative cash flow for the foreseeable future. Bloomberg News reports the company has reached an agreement on the principals of a prearranged bankruptcy with six of its first-line bondholders.
Caesars was taken private in 2008 for $30.7 billion by Apollo Global Management and TPG Capital. The gaming company, which operates 40 casinos in the U.S. and Canada, is attempting to restructure an industry high $22.8 billion in debt. That’s more debt than the $18 billion that forced Detroit into municipal bankruptcy.
Caesars operating unit “does not expect its cash flows from operations will be sufficient to repay its indebtedness and will ultimately need to pursue additional debt or equity offerings or seek a refinancing, amendment, private restructuring nor reorganization under Chapter 11 of the Bankruptcy Code,” the company said in its filing with the Securities and Exchange Commission.
Meanwhile, Caesars has begun laying off about 1 percent of its 68,000 workers company-wide, including employees in Las Vegas and statewide. A prearranged bankruptcy is expected to be filed in January, according to Bloomberg.
As Caesars continues to struggle financially, Ultimate Gaming is ending its operations in Nevada. The decision comes about two months after the online poker company withdrew from New Jersey. Ultimate Gaming attributed its decline mostly to sluggish revenue and a limited pool of players.
“As has been the case in other jurisdictions, online poker revenues in Nevada have fallen far short of expectations,” Ultimate Gaming Chairman Tom Breitling said in a statement. “Moreover, the state-by-state approach to online gaming has created an extremely cost-prohibitive and challenging operating environment.” Breitling said those factors have combined to “make the path to profitability very difficult and uncertain.”
The closure is effective immediately upon complying with Nevada gaming regulatory requirements, according to Ultimate Gaming. Players with questions about their account can click the “support” option at ultimatepoker.com. Ultimate Gaming’s departure now leaves Caesars Interactive’s WSOP.com and the South Point’s Real Gaming as the only legal poker sites in Nevada.
GUEST
Howard Stutz, gaming reporter and columnist with the Las Vegas Review-Journal
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