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Caesars Group's agility in repaying debt poses problems for Wall Street

Industry analysts and Wall Street are concerned about Caesars' debt because the company borrows heavily.

SymClub
Apr 8, 2024
2 min read
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Caesars Group's agility in repaying debt poses problems for Wall Street

If you think your credit card debt is overwhelming, imagine you have $20 billion worth of credit card debt, plus long-term debt. Add to that a decline in revenue streams and a net loss of $1.74 on the NYSE. People on Wall Street are starting to shudder a little at the fact that Caesars Entertainment's nightmare has now become a reality.

Game analysts are cautious

Speaking at a recent gathering of industry investors, Macquarie Securities gaming analyst Chad Beynon said there were questions about the casino giant's current financial health. "From our perspective, Caesar's story remains relatively the same," Beynon said. "Fundamentals remain weak in most markets and heavy debt loads continue to weigh on companies." Translation: "You're making us nervous."

Caesars owns 10 casinos on the Las Vegas Strip and another 50 on each coast (four of which are in financially troubled Atlantic City), and other gaming analysts claim that given the current As a result, Caesars Casino had only two years until 2015 to complete the transformation of its water business. Stay financially sound. Just like you and me, banks won't lend money to companies that really need it. So while Caesars still has some cash flow, it would be better off acquiring additional sources of credit to benefit from its repayment capabilities.

John Kempf, gaming analyst at RBC Capital Markets, summed up Caesars' financial outlook for investors: "Overall, from our perspective, the company's first quarter Nothing has changed since the report." Our negative assessment is based on the company's unsustainable growth. Capital structure and liquidity conditions deteriorated. "Ouch.

Spend money to make money

With a view like that, you might think Caesar would tighten his belt a little, but not that much. Instead, the company has building plans everywhere in the coming years.

In fact, Caesars has pledged to spend $1 billion on new construction and building renovations by the end of 2013. Projects under planning include The Linq, the company's new open-air retail, dining and entertainment precinct, the conversion of the shuttered Royal Palace into The Quad, and the conversion of Bill's Gamblin' Hall into the commercial district as it will later be known. Las Vegas Gansevoort. Catchy name. no.

Outside of Vegas, Caesars is planning to develop several properties in the Midwest. Let’s not forget that they are about to launch a second legal online poker site in Nevada, a World Series of Poker branded site that will be launched during the actual series in June, assuming all regulatory processes go as planned. Launched during the competition.

future

The big question is whether all this investment, along with some significant internal restructuring, will pay off for Caesars. At least one expert, GimmeCredit Investors Service analyst Kimberly Noland, is skeptical. "While we do not believe there will be a liquidity crisis in the near term as the company currently has cash and available funding, pressures may increase as the parent company faces nearly $5 billion in securities maturities in 2015," Nolan said. ” Translation: “Don’t drown in your debt when it comes due.”

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Source: www.casino.org

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