Caesars happy with High Roller but mum on debt

Caesars Entertainment Corp. officials were happy to discuss the company’s second quarter results Monday, including improvements in the Las Vegas market credited to the opening of The Linq and its centerpiece High Roller observation wheel.

But don’t ask about Caesars’ ongoing restructuring plans to address its gaming industry-high $24.2 billion in long term debt.

At the outset of the question-and-answer session with analysts and investors, Caesars Chairman Gary Loveman said the company wouldn’t provide any additional disclosures related to its capital structure.

The first question concerned funding one of the company’s new affiliate divisions.

“Unfortunately, that question fell into the demilitarized zone,” Loveman said.

The analyst, saying he had no further questions, promptly hung up.

Last week, Caesars filed a lawsuit in New York claiming more than 30 bondholders are disrupting the company’s restructuring efforts. A Delaware-based fund that owns a portion of Caesars debt sued the company saying it had fraudulently transferred casino ownership to different entities.

“We have provided as much detail as we are presently able to and will release additional details as they become available,” Loveman said.

On Monday, Caesars said it more than doubled its net loss for the quarter that ended June 30 despite a jump in revenue fueled by the company’s Las Vegas operations.

The casino giant, which operates nine resorts on or near the Strip, blamed a reduction in tax benefits and a pre-tax increase in interest expense were factors in the company’s net loss.

Caesars reported a net loss of $466.4 million, an increase of 119.8 percent from the same quarter a year ago. The company’s loss per share was $3.24, compared to $1.69 per share in the second quarter of 2013.

The company’s net revenue grew 3 percent to $2.185.5 billion.

“For the second quarter, our business demonstrated continued strength in Las Vegas driven in part by our hospitality investments, which was offset by the persistent softness in the regional markets and Atlantic City,” Loveman said.

He credited the opening of The Linq retail and dining district and the High Roller with driving customer traffic to the company’s near-by properties. He said the High Roller has attracted more than 500,000 riders since opening in March.

“We have been pleased with the High Roller’s performance to date, which has not only transformed the Las Vegas skyline but it has added a substantial new experience to the city,” Loveman said. “The wheel has quickly become one of the top paid admissions destinations in Las Vegas.”

Caesars broke out its quarterly earnings by operating divisions; Caesars Entertainment Resort Properties — which includes the Linq, Caesars Growth Partners — which operates six resorts and the company’s online and social gaming products, and Caesars Entertainment Operating Co., which includes 44 properties.

Both Caesars Resorts Properties and Caesars Growth Partners had “cash-flow positive structures with out-sized exposure to destination markets.” Caesars Entertainment Operating Co. accounted for $1.38 billion of the company’s overall quarterly revenue and was responsible for $349.9 million of the company’s overall net loss.

Earlier Monday, company affiliate Caesars Growth Partners said its net income was $28.9 million in quarter, or 6 cents per share.

The company, which is traded under Caesars Acquisition Partners, said net revenue grew 31.8 percent to $438.7 million, which included $294.1 million in revenue from the company’s casinos and $144.6 million in revenue from social gaming, interactive gaming and the World Series of Poker.

Shares of Caesars Entertainment closed at $13.67 on the Nasdaq, up 31 cents or 2.32 percent. Shares of Caesars Acquisition closed on $11.49 on the Nasdaq up 23 cents or 2.04 percent.

Loveman called Atlantic City “a sad story” and said the company still plans to close the Showboat, one its four casinos in the battered market, at the end of August.

“Other participants in the market have followed suit in what we believe to be a painful but constructive development for the market,” Loveman said. “We are hopeful that rationalization of capacity in Atlantic City combined with concerted effort to attract mid-week traffic and hospitality guests will help stabilize the market.”

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