State gaming regulators signed off Thursday on Caesars Entertainment Corp.’s plan to sell four of its resorts to the company’s Caesars Growth Partners affiliate for $2.2 billion.
The deal, which was announced 18 days ago, is akin to a transfer of assets from the parent company to a business that was created last year to help the world’s largest casino operator expand its presence while dealing with its gaming industry-high $23 billion of long-term debt.
The casino operator will manage the properties — Bally’s Las Vegas, The Quad, the under-construction Cromwell and Harrah’s New Orleans — after the deal is finalized.
Caesars Entertainment senior vice president Eric Hession told regulators that Caesars Growth Partners’ “strong balance sheet” will benefit the properties.
He said Caesars Growth Partners will assume $185 million of debt associated with The Cromwell — formerly Bill’s Gamblin’ Hall — and will spend $223 million to finish redevelopment of The Quad, which had been the Imperial Palace.
Hession said Caesars Growth Partners will remodel The Quad’s hotel rooms, hallways and pool area while adding entertainment attractions.
“It completely transforms that property, which is at the 50-yard-line of the Strip,” said Craig Abrahams, chief operating officer of Nasdaq-traded Caesars Acquisition Co., which manages Caesars Growth Partners. “It will not resemble past memories.”
Caesars Growth Partners already owns Planet Hollywood, the Octavius hotel tower at Caesars Palace and the Horseshoe Casino Baltimore, which opens this fall. The company also owns Caesars’ interactive gaming business, which includes real money online gaming activities in Nevada and New Jersey, a growing social gaming business and the World Series of Poker.
Caesars Interactive Entertainment CEO Mitch Garber is also CEO of Caesars Growth Partners.
Caesars Entertainment owns 58 percent of Caesars Growth Partners.
The transaction will result in cash proceeds of $1.8 billion and allow Caesars to transfer a portion of the company’s overall debt to an affiliate.
A shared-services joint venture will provide operating services to all of Caesars subsidiaries. The casinos still will operate under the company’s Total Rewards loyalty program. Hession said the transaction will be “transparent to customers.”
The three-member Gaming Control Board signed off on the transaction after holding a special hearing in Las Vegas that lasted a little more than an hour. Members of the Nevada Gaming Commission sat in the audience and held a second hearing right after the Control Board to approve the panel’s recommendation.
“This will allow the company to move forward and take care of some its liquidity issues,” said Control Board member Shawn Reid.
Both members of the Control Board and the commission said they were concerned with Caesars’ overall financial structure. Louisiana gaming regulators need to approve the Harrah’s New Orleans portion of the transaction.
Caesars Growth Partners is structured to make capital investments.
Caesars’ private equity owners, TPG and Apollo Management Group, each put $500 million into Caesars Growth Partners. High-profile investors, including hedge fund billionaire John Paulson, who owns 12 million shares, bought in. Soros Fund Management, the investment arm of billionaire George Soros, a high-profile supporter of liberal and progressive political causes, owns 6 million shares.
Contact reporter Howard Stutz at email@example.com or 702-477-3871. Follow @howardstutz on Twitter.