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US – Caesars misses top and bottom targets on $1bn loss

By - 4 March 2015

Shares in troubled Las Vegas giant Caesars Entertainment fell sharply after the casino operator posted losses of over US$1bn, missing both the higher and lower line estimates for its fourth quarter.

The net loss of $1.01bn was an improvement over the $1.76bn loss it reported a year ago with revenue also increasing by six per cent to $2.13bn.

For 2014 as a whole, Caesars reported net revenue increase of 3.6 per cent to $8.5bn, revealing that weak table game hold at Caesars Palace resulted in $60m less in cash flow than a year ago.

Caesars’ biggest subsidiary, Caesars Entertainment Operating Company (CEOC), which owns 30 casinos, filed for Chapter 11 bankruptcy protection in January and is now piecing together restructuring plans.
Caesars Chairman and CEO Gary Loveman said: “The financial restructuring for CEOC is part of a comprehensive plan to strengthen CEOC and all of Caesars Entertainment and position them for sustainable, long-term growth and value creation.”

“Ongoing strength in the interactive business, new hospitality offerings and sequential improvement in same-store regional results were key drivers of our fourth quarter performance despite the continuation of exceptionally unfavorable hold at Caesars Palace,” said Mr. Loveman added. “As we begin 2015, we are highly focused on enhancing performance at CEOC through a series of cost initiatives and the implementation of the previously announced financial restructuring plan. With more than 80 per cent of first lien noteholders supporting the plan, we are committed to working with additional creditor groups to build greater consensus and complete the restructuring process as quickly as possible.”

Caesars Acquisition Company meanwhile reported its own results for Caesars Growth Partners for the fourth quarter and full-year 2014.

In May 2014, subsidiaries of CGP LLC acquired Bally’s Las Vegas, The Cromwell, The LINQ Hotel & Casino and Harrah’s New Orleans from subsidiaries of Caesars Entertainment Operating Company.

Fourth quarter Adjusted EBITDA for Caesars Entertainment Corporation was $372m. Top-line results benefited from the addition of The Cromwell, Horseshoe Baltimore, and the High Roller as well as new hospitality offerings. Furthermore, strong growth in CIE provided over $60m in incremental revenue in the quarter. These increases to revenue were negatively impacted by approximately $60m of unfavourable year-over-year hold at Caesars Palace, higher start-up costs from new properties as well as new food and beverage outlets, and increased overhead expenses.

Caesars said it was intensely focused on ensuring operating costs were aligned with the current environment to enhance CEC’s profitability.

It generated strong results in the Interactive Entertainment business unit with net revenues and Adjusted EBITDA up 63.6 per cent and 87.1 per cent year over year, respectively. It recorded consistent growth in the Casino Properties and Development business unit with revenues up 40.1 per cent year over year, primarily from the openings of The Cromwell in Q2 2014 and Horseshoe Baltimore in Q3 2014. It also commenced operations for The LINQ Hotel & Casino post completion of Phase 1 of the renovations.

Mitch Garber, chief executive officer of Caesars Acquisition Company, said:”Caesars Growth Partners, LLC reported solid quarter and full-year results driven by growth in both of our business units. Our Interactive Entertainment business continues to yield remarkable results, primarily from our leading social and mobile games business. During the fourth quarter, we completed the first phase of renovations at The LINQ Hotel & Casino. We are excited about the transformation of this asset and the successful opening of The Cromwell and Horseshoe Baltimore. We remain encouraged by the performance of the assets this year and will continue to focus on these businesses to deliver operating growth.”

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