Business

Caesars’ Bet on Better Days Led to Bankruptcy for Division

Published

10 years ago

January 14, 2015

In this Monday, Jan. 12, 2015 photo, a man takes pictures of Caesars Palace hotel and casino, in Las Vegas. The company said Friday, Jan. 9, it has a majority of the holders of its debt on board with a pre-planned bankruptcy agreement that would reorganize Caesars Entertainment Operating Corp. into two separate companies, one to own casino-hotels and the other to lease them, and cut its existing debt by about $10 billion. (AP Photo/John Locher)

KIMBERLY PIERCEALL, Associated Press

LAS VEGAS (AP) — Financial problems plaguing Caesars Entertainment and its casino empire have the company considering a trip to bankruptcy court, possibly as early as Thursday.

It doesn’t necessarily signal the end of this faux Roman Empire, though.

If all goes according to the company’s plan, drawn up with its most senior creditors, it should be business as usual for customers — its doors will remain open, the slot machines will still sing, chips will rest atop tables.

“Caesars is, in a certain sense, a Nevada version of ‘too big to fail,'” said Michael Green, a history professor with the University of Nevada, Las Vegas.

It’s still a gamble.

U.S. casino-hotel companies are dependent on extra cash in a person’s pocket, but perhaps none more than Caesars, which waded into the recent economic downturn already burdened by more debt than any of them — a by-product of a buyout in January 2008 that was largely a wager using other people’s money.

While competitors found fortune in Asia’s casino growth as stateside gambling in Las Vegas and Atlantic City waned, Caesars missed out. And as other companies built arenas and shopping districts on the Strip or casino-hotels in newer gambling markets across the country, analysts say Caesars was reluctant to spend.

It went private, then public again to raise cash and created new related companies, shifting its properties from one to another to free them up from the debt cordoned off in one spot, its Caesars Entertainment Operating Co. That’s the company now headed to bankruptcy court.

Regardless of the maneuvers, “the fundamentals were not there to support the amount of debt that they had,” said Keith Foley, an analyst with Moody’s Investors Service.

WHAT HAPPENED

Apollo Global Management LLC and TPG Capital LP did what a lot of private equity firms were doing at the time when money and loans were easy to come by, buying companies with promise — relying mostly on debt — to add to its portfolio. The gambling industry looked promising.

The deal to buy Caesars (then known as Harrah’s) was first announced in 2006 during the heyday of Vegas tourism and development. But the deal didn’t close until January 2008, several months before Lehman Brothers would go bankrupt, shaking the economy to its core. And it was a nearly $30 billion deal with the two firms taking on more than $10 billion of existing debt and relying on several billion more in bonds to pay for the company.

In between, the company had cut about 200 people from its corporate staff. Before the year was done, Caesars was cutting more staff and looking for new cash to make its interest payments.

WHAT NOW

Among its casino peers, Caesars’ empire remains the largest, employing some 68,000 people worldwide at more than 50 casino-hotels, including Caesars Palace on the Las Vegas Strip.

While Caesars Entertainment has seen a steady $8.6 billion or so in revenue since 2009, it’s been outpaced by Las Vegas Sands Corp., which went all-in in Macau, China, and grew every year to post revenue of $14.5 billion in 2013.

Las Vegas Sands made a $2.3 billion profit that year. Caesars lost $2.9 billion.

Caesars has lost money each year for the last five years.

Still, the company unveiled its High Roller observation wheel and newly renovated hotels on the Strip: The Linq and The Cromwell. It hired headliners for shows at The Colosseum inside Caesars Palace.

All the while, it was shifting and shuttering other assets.

Last year, the company closed properties in Atlantic City, London and Mississippi and said it would cut its global workforce by less than 1 percent.

“They’re going to have to become a little leaner,” said Chris Jones, an analyst for Union Gaming Group. He added that he doesn’t expect any more properties to shut down and expects the plan will free up Caesars to reinvest where it hasn’t, including the gambling floor.

WHAT’S NEXT

The company faces irked creditors, a few who have tried to force the casino giant into bankruptcy against its will this week. Others have sued, claiming the company ransacked Caesars Entertainment Operating Co. of most of its valuable assets. Caesars called the claims meritless and alleges some of its holdout creditors are hoping for the company’s demise in order to win wagers predicting as much.

Despite the acrimony, the company says that after months of negotiations it has more than 60 percent of the holders of its first-priority debt on board with its plan.

The plan would shed $10 billion in debt from its weighed-down operations division, leaving it with $8.6 billion and winnowing its annual $1.7 billion in interest payments to $450 million. Senior creditors who OK’d the plan would get cash and new debt to make them whole.

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BWOPA Honors Black Leadership and Legacy at 2024 Ella Hill Hutch Awards Dinner

On Dec. 5, BWOPA held its Annual Ella Hill Hutch Awards Ceremony, at the Fairmont Claremont Hotel in the Oakland/Berkeley Hills. At the event, the group comprised of Black women from various professional backgrounds, honored distinguished local and state leaders whose contributions have shaped civic engagement and advanced critical social issues impacting Black communities.

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12 hours ago

December 18, 2024

Oakland Post

L-R: BWOPA State Executive Director LaNiece Jones; State Asm. Mia Bonta; BWOPA 2024 Man of The Year/Urban League SFBA CEO Ken Maxey; BWOPA State President Hon. Dezie Woods-Jones; State Senator Lola Smallwood-Cuevas; Rowena Brown, Oakland Councilmember At-Large, Elect; BWOPA State Regional Director Vashone Huff. Courtesy photo.

By Oakland Post Staff

Black Women Organized for Political Action (BWOPA) is a statewide non-profit advocacy and membership organization committed to solving problems affecting Black Californians.

On Dec. 5, BWOPA held its Annual Ella Hill Hutch Awards Ceremony, at the Fairmont Claremont Hotel in the Oakland/Berkeley Hills.

At the event, the group comprised of Black women from various professional backgrounds, honored distinguished local and state leaders whose contributions have shaped civic engagement and advanced critical social issues impacting Black communities.

The evening was hosted by Dr. Shawna Charles, founder of The Charles Communications Group (CCG) headquartered in Los Angeles. Charles served as mistress of ceremonies.

With a track record of elevating voices and empowering communities, Charles’ leadership and insight brought a certain dynamism to the celebration.

“Each year, this event not only celebrates the enduring legacy of our beloved BWOPA founding member, Ella Hill Hutch, but also reaffirms and amplifies our unwavering commitment to building and sustaining Black political power across California,” said Dezie Woods-Jones, BWOPA founding member and State president.

“Ella Hill Hutch’s trailblazing leadership continues to inspire us as we forge ahead, empowering Black women to lead, advocate, and shape a more equitable future for all,” added Woods-Jones.

This year’s event introduced the DWJ Rising Star Award, honoring young leaders like Solano County Board Supervisors-elect Cassandra James, Danielle Motley-Lewis, Naomi Waters and newly elected State Assemblymember elect Rhodesia Ransom (D-Stockton).

According to organizers, the awardees all exemplify “the next generation of changemakers.”

Other awardees included:

Lifetime Achievement Awardees: Congresswoman Barbara Lee (D-CA-12) and Alameda County Supervisor Keith Carson
Man of the Year: Kenneth Maxey, CEO of the Greater SF Bay Area Urban League
President’s Corporate Award: Yvette Radford, Kaiser Permanente
In the Spirit of Ella State and Chapter Awards: Dr. Carolyn Greene, Dr. Marcella K. Smith, Dr. Carolyn Drake, Tinisch Hollins, Jackie Jones, Gloria Burgess Johnson, Tamika L’Ecluse, Ellen Nash, Betty Reid Soskin, and Ay’Anna Moody.

BWOPA also celebrated local champions across its chapters, including leaders in voter education, healthcare, criminal justice reform, and community advocacy.

In a statement, BWOPA said, “Honoring Ella Hill Hutch’s legacy, BWOPA recognizes her pioneering efforts as the first Black woman elected to the San Francisco Board of Supervisors. Her tireless work amplifying underrepresented voices continues to inspire BWOPA’s mission to build Black political power across California.”

“We extend our heartfelt thanks to our members, partners and allies who believe in BWOPA’s vision to invest in building power for Black women’s leadership,” said LaNiece Jones, BWOPA State executive director. “Your support ensures that Black women have a voice at decision-making tables locally, regionally, statewide, and nationally, advancing diversity and equity in leadership spaces.”

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Oakland Post: Week of December 11 – 17, 2024

The printed Weekly Edition of the Oakland Post: Week of December 11 – 17, 2024

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5 days ago

December 13, 2024

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Post News Group to Host Second Town Hall on Racism, Hate Crimes

The mission of CRD is to protect the people of California from unlawful discrimination in employment, housing and public accommodations (businesses) and from hate violence and human trafficking in accordance with the Fair Employment and Housing Act (FEHA), Unruh Civil Rights Act, Disabled Persons Act, and Ralph Civil Rights Act. The employment anti-discrimination provisions of the FEHA apply to public and private employers, labor organizations and employment agencies. “Housing providers” includes public and private owners, real estate agents and brokers, banks, mortgage companies, and financial institutions.

Published

1 week ago

December 10, 2024

Oakland Post

By Oakland Post Staff

On Tuesday, Dec. 10, from 5-6:30 p.m. PT, Post News Group Global Features Journalist Carla Thomas will host a second Virtual Town Hall on Racism.

Guests will include community builders Trevor Parham of Oakstop and Shawn Granberry of Hip Hop TV.

“There’s been an uptick of blatant racist acts going on in the community and it’s important for communities to have a forum, an outlet, and to be educated on the California Vs. Hate initiative that has resources available for victims and witnesses,” said Thomas. People like Trevor Parham and Shawn Granberry have found a multitude of ways to strengthen, heal, and protect the community through their entrepreneurial networks, special events, and mentoring.”

While community leaders step up, the state has added extra support with the CA vs. Hate, initiative, a non-emergency hate incident and hate crime reporting system to support individuals and communities targeted for hate.

“We are committed to making California a safer and inclusive place for all,” said James Williams, Jr. of the California Civil Rights Department.

In partnership with organizations across the state, the network is designed to support and protect diverse and underserved communities.

“Through CA vs. Hate, we support individuals and communities targeted for hate, identify options for next steps after an act of hate, and connect people with culturally competent resources and care coordination services,” said Williams.

“It’s important to report these incidents in order for us to use the data to enhance prevention and response services,” said Williams.

Funded by the California State Legislature, the California Civil Rights Department (CRD) received funding and authorization from the State Legislature to establish the non-emergency, CA vs. Hate Resource Line and Network to support individuals and communities targeted for hate.

CRD began in 1959 with the creation of the Fair Employment Practices Commission to implement California’s first state-wide protections against discrimination in the workplace. In 1980, the 1959 Fair Employment Practices Act, and the 1963 Rumford Fair Housing Act were combined and rebranded FEHA. The Fair Employment Practices Commission became a department-level agency named the Department of Fair Employment and Housing (DFEH) to enforce that law.

In July 2022, DFEH’s name changed to CRD to more accurately reflect the Department’s powers and duties, which include enforcement of laws prohibiting hate violence, human trafficking, discrimination in business establishments, and discrimination in government-funded programs and activities, among others.

For more information visit the PostNewsGroup.com and CAvsHATE.ORG.