Caesar's To Spin Off it's Online Offering
There's a new plan in place for Caesar's Interactive meaning that it will be spun off, becoming only part owned by the casino giant in a bid to cut down on long term debt. There are two private equity companies that will be both taking over the interactive arm and also investing $500 million that could possibly rise to $1.2 billion in the deal. Apollo Management and TPG Capital are the firms in question and the whole deal is targeted at reducing the $20 billion debt that the casino group is holding. There's slightly more to it than just the interactive part buy out, as the new and separate company called Caesar's Acquisition Company has already been created, headed up by current Caesar's Interactive head Mitch Garber this company will oversee the transition that also includes the Planet Hollywood chain and the planned Horseshoe Casino in Baltimore.
Gary Loveman the President and CEO of Caesar's Entertainment says that, "The transaction is an important step in our ongoing efforts to improve the company's balance sheet and position ourselves to make strategic investments," He continued with, "Caesars Growth Partners and its simple and flexible capital structure provide us with a vehicle to pursue growth opportunities while retaining a significant portion of the financial upside associated with these assets and projects. The transaction enables us to raise equity capital at attractive valuations without diluting stockholders of Caesars and provides Caesars additional cash liquidity without incurring new debt." This move was predicted back in September when Fitch Ratings said that a spin off of the online division would be a "logical precursor to a restructuring". It's no secret that Caesar's is struggling with debt at the moment and this should bring a little much need relief. Much of the debt is due to acquisitions in recent years and hopefully they will pay off soon. They bought a 51% stake in Playtika the Social Games developer and followed that up by purchasing the remaining 49% and have also signed B2B deals with 888 in preparation for online gambling in the states.