Newsletter causes rumours about Caesars bankruptcy
A newsletter that went out on Monday this week in Las Vegas advised customers not to deposit money in Caesars hotels or casinos because of the high prospect of the company filing for bankruptcy.
The newsletter published by Bill Mandel said, “In an abundance of caution, this newsletter advises you not to deposit any funds (deposits for hotel reservations, deposits in the cashier’s cage or not redeeming casino chips, etc.), in … Caesars hotels, until the situation at Caesars becomes clearer.”
Analysts have speculated for many months now that Caesars could file for bankruptcy, but the word from company insiders say senior executives are not considering the option. However the rumours continue to swirl around Las Vegas and financial institutions as the company refuse to comment on any rumours, as is there company policy said company spokesman Gary Thompson.
Experts say that should Caesars go into bankruptcy protection it is highly unlikely that customers would be affected in any way with room reservations and deposits of any sort.
The US casino giant did see a 5% drop in their share price on the newsletter release, however the share price did recover later in the day.
Caesars has a $20 billion debt pile and in 2015 is due to pay a pre-arranged payment of that debt of some $4.4 billion which is where speculation of a default is coming from as the company struggle to survive without the luxury of a Macau Casino which many other US casino operators look to for huge cash injections as the gambling hub continues to grow profits.
Many finance analysts say without the huge debt pile the company is profitable, recently Caesars announced it has assets of over $15 billion, in property and equipment, along with turning in a pre-debt payment revenue of £125.3 million in the last reported quarter of 2013, but once re-payments were done Caesars posted a loss of more than $209 million.
The company is looking to sell off parts of its business including its loss making venture in the UK, London Clubs International (LCI) that the company bought Back in 2006, Caesars purchased LCI for £279.3m and that investment grew to over £300m, now it is understood that the Las Vegas based company is willing to let it go for as little as £165m, currently there seems no takers for LCI.
Caesars did sell its land in Macau for $438 million that it had hoped to build a casino resort on, but failed to receive a license, that really was a huge blow for the US casino operator as all their US competitors enjoy huge profits from the Asian market.
What is the future for the gambling giant? Time will tell but most observers believe that the company’s debt pile has to be restructured in some manner or survival will be unlikely.
