In a bid to restructure their debt, Caesars Entertainment (NASDAQ:CZR) will merge with parent company Caesars Acquisition (CACQ). The merger will result in a combined publicly traded company which will aim to reduce it’s existing $18.4 Billion debt in bankruptcy court. The company has lost money on a yearly basis since 2009. By merging with the sister company that was set up to acquire online gambling sites, the company will look to eliminate half of their debt. The deal would also free up $1.7 Billion in cash to reorganize with bond holders.
Upon announcement of the restructuring, shares for the Las Vegas Casino operator climbed 15% to $15.55 as the news would help the company’s cash flow and reduce external financing with impending Chapter 11 bankruptcy filing. Caesars Entertainment shareholders will own 62% of the merged company while Caesars Acquisition investors will hold 38%.
Caesars said that the combined company “will be the preeminent gaming and hospitality company in Las Vegas”. The company will own 11 properties in Las Vegas and also operate Caesars Palace. It will also own properties including Harrah’s New Orleans, Harrah’s Atlantic City, Harrah’s Laughlin, and Caesars Acquisition’s current equity interest in Horseshoe Baltimore. Furthermore, it will own a majority stake in online gambling arm- Caesar’s Interactive Entertainment Inc. The companies will all share the same loyalty program for patrons under the Total Rewards Loyalty scheme.
Overall, the merger will give Caesars Entertainment Corp a much more corporate structure with reduced leverage. The company will have $1.7 billion in cash on its balance sheet and the merged company will trade on the Nasdaq under the ticker CZR.
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