Captain Loveman’s sinking ship

Loveman_x220As was widely expected, Caesars Entertainment defaulted on a $225 million interest payment, setting the stage for a prearranged bankruptcy. Company spokesman Stephen Cohen said airily, “It’s clear Caesars has sufficient liquidity to make the payment, we just chose not to at this time.” In related SEC filings, the company alluded to an unspecified “oral agreement in principle” with certain parties to its debt negotiations. The plan is apparently to put Caesars Entertainment Operating Co. into bankruptcy and then reinvent it as a REIT, since it controls over 75% of the company’s real estate (and a hernia-inducing 10:1 debt-to-cash flow ratio). A managerial company would be spun off the REIT, enabling CEO Gary Loveman to keep calling the shots.

Making Loveman’s job harder, creditors keep leaving the sinking Caesars ship. KKR & Co. and Franklin Resources are among those believed to have told Caesars to go fly a kite over its latest restructuring plan. Ditto “the world’s biggest asset manager,” BlackRock Inc. “Shelving the negotiations means that Caesars must now decide whether to proceed with the bankruptcy plan without the blessing of its highest-ranking lenders,” reported Bloomberg News. Further complicating the picture, UMB Bank is still negotiating with Caesars but is simultaneously suing to have its top brass removed from office.

Having just offloaded defunct Showboat Atlantic City for $18 million, Caesars effectively took the cash and used it to placate long-suffering, second-tier note holders with a $16 million payment. (“An applicable high-yield discount obligation redemption” is the formal term.)

* In a laudable development, the University of Nevada Las Vegas is going to begin teaching gaming regulation. It’s a program that’s much needed, especially here. This is the brainchild of veteran gaming attorney Anthony Cabot. While I’ve not always agreed with Cabot’s views, his expertise and experience are both undeniable, putting him at the forefront of gaming-law practice. “I’ve always felt that there wasn’t sufficient academic research or academic recognition of gaming law as an actual discipline,” Cabot told Vegas Inc. The, uh, student body is described as “officials from areas that are expanding the gaming industry, or new regulators with limited professional exposure to casinos.”

While there’s been some sporadic instruction in gaming regulation at UNLV, “here and there,” Cabot says, this will be the first dedicated program. International Gaming Institute Executive Director Bo Bernhard makes an excellent point: “The gaming industry is a very strictly scrutinized industry, in large part because it’s got a history of bad guys being involved, but there’s never been an academic field dedicated looking at how you monitor and regulate this very complex and global industry.” As Cabot says, hopefully it will take the guesswork out of regulatory practice.

* Genting Americas is so eager for an upstate New York casino that it’s making the nonsensical argument that it will “build off clients who already go to Resorts World Casino at the Aqueduct Racetrack in New York City’s Queens borough.” Doesn’t that defeat the whole purpose? Meanwhile, slot parlors on Long Island continue to move forward.

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