Caesars Entertainment restarts IPO process

Caesars Entertainment Corp. on Tuesday restarted the company's plans for an initial public stock offering, but at about 10 percent of what the casino operator hoped to raise when it canceled the idea nearly a year ago.

In a filing with the Securities and Exchange Commission, Caesars said its looking to raise up to $50 million by selling shares of the company, which operates 10 resorts on or near the Strip including Caesars Palace, Harrah's, Bally's, Flamingo, Planet Hollywood Resort and the Rio.

A year ago, Caesars planned to raise as much as $532 million before it pulled its IPO, citing market conditions.

According to the company's prospectus, the $50 million figure is subject to change as managers of the IPO gauge investor interest.

A Caesars spokesman declined to comment beyond the filing with the SEC. The government agency has up to three months to rule on the IPO.

Caesars didn't state how many shares it would place on the market.

KDP Investment Advisors gaming analyst Barbara Cappaert told clients in a research note the figure sought through the IPO was "a drop in the bucket for a company with just over $19 billion in debt."

However, Cappaert suspected the IPO would lead to secondary sale of stock by the company's major shareholders, including private equity firms Apollo Management Group and Texas Pacific Group. The two companies took Caesars -- then known as Harrah's Entertainment -- private in 2008 in a $30.7 billion buyout.

Hedge fund Paulson & Co. acquired
10 percent of Caesars' debt last year.

As of Sept. 30, Caesars had $19.6 billion in debt, up from $18.8 billion at the end of last year.

Harrah's, when it was a publicly traded company, acquired Caesars Corp. in a $9 billion buyout in June 2005. Last year, the company changed its name to Caesars Entertainment Corp. when its IPO was announced.

Caesars is one of few casino operators expanding as the gaming industry recovers from the recession. The company, which has 52 casinos in 12 U.S. states and seven countries, is building casinos in Cincinnati and Cleveland through a joint venture with an Ohio company and released plans Monday for a casino in downtown Baltimore.

In Las Vegas, Caesars is proceeding with Project Linq, a $550 million nongaming retail, dining and entertainment development on the Strip, anchored by a 550-foot observation wheel. Caesars officials said they have raised the funds to build Project Linq.

The company is also completing the 660-room Octavius Tower at Caesars Palace, which the company expects to open New Year's Day. The tower's opening would give the hotel-casino more than 4,000 rooms.

Cappaert told investors she thought the company would proceed with a $500 million IPO next year to retire debt and fund growth.

"Caesars is looking at expanding gaming in Baltimore, China and pretty much most new gaming locales," Cappaert said. "If this drop-in-the-bucket IPO works and the company gets the go-ahead on a new gaming project, we expect Caesars would be back in the market with a combo of debt and equity next year."

Caesars' IPO announcement comes as other IPOs seem to be moving forward.

According to The Associated Press, IPOs by daily deals pioneer Groupon and online game maker Zynga may have whetted investors' appetites after the stock market's volatility in recent months dampened IPO buzz.

According to Renaissance Capital, nine IPOs are expected to go to market this week. It would be the busiest week since December 2010 if all of them price successfully.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.