November 15, 2011 8:05 pm

Caesars Entertainment revives offering plan

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Caesars Entertainment, the debt-laden casino group, has revived plans for an initial public offering a year after pulling a planned listing because of concerns about market volatility.

The owner of Las Vegas casinos including Caesars Palace, the Flamingo and Planet Hollywood pointed to positive trends in the business and leisure travel market in a regulatory filing. It added that the possible legalisation of online gambling in the US could open up a lucrative new market.

The renewed IPO push comes amid a flurry of other deals, with Groupon, the daily deals operator, completing a listing and Zynga, the online social gaming group, due to float this month. As many as nine companies are seeking to complete listings in November.

Caesars was taken private at the peak of the bull market in 2006 by Apollo Global Management and TPG, the private equity investors, in a highly leveraged $17bn deal. The company has close to $20bn of debt, according to Tuesday’s regulatory filing.

But since its purchase, Caesars – formerly known as Harrah’s – has struggled to restructure its debt amid the global recession and an economic downturn that has wreaked havoc in Las Vegas, its biggest market.

The company was further weakened by its lack of presence in the booming Macau gaming market. Caesars failed to secure a gaming licence in Macau and could only watch as rival companies, such as Las Vegas Sands and Wynn Resorts, capitalised on a market which has grown larger than Las Vegas.

In Caesars home Las Vegas market, the opening of MGM Resorts’ $9bn CityCenter project increased room capacity in the city at the worst possible time, which has depressed room rates for rival operators. Several high-profile casino developments have also stalled, such as the billion dollar Echelon and Fontainebleau projects, while the city leads the US in mortgage foreclosures and unemployment.

However, there are signs of a rebound in visitor numbers to Las Vegas, which attracts a large share of US convention trade. Furthermore, Caesars, owner of the World Series of Poker, would be a prime beneficiary if lobbying efforts succeed at reforming US online gambling laws.

Caesars said in the filing it was “better positioned than our competitors” to take advantage of “new opportunities” in the gaming industry. “We are the only US land-based casino company that owns an online gaming business,” it said.

Caesars said it planned to raise $50m in the IPO, far less than the $530m it hoped to raise in its scrapped IPO from last November.

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