Last weekend, Caesars Entertainment confirmed what we already expected: It will file bankruptcy for Caesars Entertainment Operating Co. next month, in what the New 
York Times called “an ignominious milestone for what was one of the biggest buyouts of the private equity boom that preceded the financial crisis.” The move is intended to whittle $18.4 billion in debt into a mere $8.6 billion, according to Fortune. This will be followed by a REIT spinoff whose goals include reducing annual interest payments to $450 million. This move, said CEO Gary Loveman, would “significantly reduce [CEOC’s] leverage by creating two better capitalized companies with vastly improved cash flow generation.” Caesars’ $1.7 billion cash reserve will be all but drained into CEOC. All members of the first-lien steering committee are on board with the move, which also had a positive effect on Caesars’ stock price.
Meanwhile, in another of Caesars’ sleight-of-hand moves, parent entity Caesars Entertainment will acquire controversial “Little Caesars,” Caesars Acquisition Co. (controversial, at least, among debt holders who feel that Loveman squirreled away all the good assets in Little Caesars). This move, reports the Times, “will allow Caesars Entertainment to help restructure the debt of Caesars Entertainment Operating Company without taking on more debt and further diluting existing shareholders.” Taken private for over $30 billion, Caesars now has a market value that is roughly a tenth of that much.
“This kind of makes the whole thing work,” Fitch Ratings analyst Alex Bumazhny said of the deal’s effect upon the company’s restructuring. He told Reuters that cash from Caesars Acquisition would palliate creditors riled by the now-infamous asset transfers: “Bumazhny said Monday’s deal shows Caesar’s Entertainment Corp and its private equity backers are trying to avoid a messy bankruptcy marked by litigation. ‘The sponsors are coming to a halfway point with creditors.'”
“For creditors, the move is good news … It will also create a simpler corporate structure that should be easier to understand and value,” resumes the Times. Stock in Caesars Entertainment would be swapped for shares of Little Caesars, to facilitate the deal. One share of Caesars Acquisition stock — worth $8.96 — gets you two-thirds of a share of Caesars Entertainment stock. Caesars Acquisition shareholders thus end up owning 38% of the parent company. Loveman would stay firmly in place, drawing $1.9 million a year for his helmsmanship, plus eligibility for a $3.25 million bonus.
* So far, the jockeying for non-Atlantic City casinos has been the province of Jersey City and the Meadowlands. But other Garden State municipalities are getting into contention, including Sussex and Newark. Lawmakers are mulling a two-pronged ballot question for November. One prong would be whether or not to end Atlantic City’s monopoly on legal gambling, the other would be setting up a subsidy that non-A.C. casinos would pay to the Boardwalk, to make up for business lost. “But negotiations and maneuvering are taking place as well on other issues, such as the number of casino licenses that could be issued, the exact geographic boundaries, and how locations will ultimately be chosen and by what criteria,” reports The Record.
One solon, state Sen. Paul Sarlo (D), a Meadowlands backer, thinks the Lege would only approve two new casinos, once the votes are counted. In addition to some geographical 
limitations, “We’d be looking for the most tax revenues, someone who can build immediately, and have their financing in place. And this is open bidding,” he told the paper. His colleague, Sen. Raymond Lesniak (D, left) has three criteria: “Most jobs created, most revenue generated, most investment made.” Horseracing mogul Jeff Gural, who runs Meadowlands Racetrack, is so hot and eager for a casino license that he’s offered to pay a 50% tax rate. (Speaking of which, there may also be a set-aside for the horsey set.)
Meadowlands Regional Chamber of Commerce chief Jim Kirkos argues that the drawing power of the Izod Center and MetLife Stadium, plus ready mass-transit access to Manhattan, makes his site the logical choice. “That’s a long-term success, even if other gambling locations come about,” he said.
Jersey City Mayor Steve Fulop — who says he’s fielding bids approaching $1 billion — countered, “There’s only one place that every major casino operator in the country already has come to check out, and that’s Jersey City.” A $4.6 billion megaresort has already been mooted by developer Paul Fireman, although it’s difficult to see how that pencils out, even on New York City‘s doorstep.
