Caesars Entertainment Revives IPO Plans

(Reuters) – Private equity-owned casino operator Caesars Entertainment Corp revived its plans to go public on Tuesday, nearly a year after scrapping them, pointing to improving prospects for companies looking to tap equity markets.

The European debt crisis and weak U.S. economic data had dampened investor appetite for new listings in the third quarter. But a strong debut by group-discount site Groupon earlier this month is likely to pave the way for other new entrants.

Caesars, one of the largest casino operators in the United States and owner of the famed Caesars Palace, has ducked in and out of the public markets a number of times, under different owners.

However, its last $500 million attempt to list fell flat as the high debt load from its $31 billion leveraged buyout by Apollo Global Management and TPG Capital spooked investors.

In its filing with the U.S. Securities and Exchange Commission, Caesars said it would look to raise $50 million through its IPO, though the initial amount is typically used as a placeholder and the final amount raised could differ.

“We think it will run into some of the same concerns investors had last year. Its debt will remain a burden, at about 10 times its EBITDA, it is above its peer group,” Sterne Agee analyst David Bain told Reuters.

The company said it had $22.51 billion of outstanding debts as of September-end and expects to pay $1.69 billion to service those obligations in the next 12 months.

COMPETITION CONCERNS

Caesars, which also operates casinos under the Harrah’s and Horseshoe brands, said it is pursuing non-gaming and branding operations in China and other Asian markets.

But while the company owns a golf course in Macau, it still lacks a casino in the Chinese enclave that overtook Las Vegas as the world’s largest generator of gambling revenue several years ago.

“They are highly levered to the U.S. consumer. Economic sentiment at the time of its roadshow will affect its valuation,” Bain said.

Bain added that with rivals opening new casinos in New York and Atlantic City, competition for the domestic consumer is heating up.

Caesars, which also owns and operates the World Series of Poker tournament and brand, is hoping to benefit from the potential legalization of online poker.

As U.S. states scramble for tax revenue, the potential for legalizing online poker has led casino and gaming companies MGM Resorts International and Boyd Gaming to unveil a plan to partner with online poker company Bwin.party Digital Entertainment.

The filing did not specify the exchange the company plans to list its shares on, but said it intends to trade under the symbol “CZR.”

The filing also did not reveal the name of the underwriters.

(Photo by Daniel Korzeniewski/Shutterstock)

(Reporting by Jochelle Mendonca in Bangalore; Editing by Supriya Kurane)