This story is sponsored by WSOP
Caesars Interactive Entertainment (CIE) and its flagship WSOP brand are to be spun off into a separate company as its heavily indebted owner looks to improve its balance sheet and ability to make “strategic investments”.
The private equity owners of Caesars Entertainment, Apollo and TPG, will back the new entity to the tune of US$500m, with the US casino group selling shares worth up to US$700m in Capital Growth Partners (CGP) for a majority stake. Caesars Entertainment will own between 57% and 77% of the new “growth-oriented venture” depending on how much it raises.
In addition to assuming control of Caesars Interactive Entertainment, CGP will invest the fresh equity of up to US£1.2bn in acquiring the Planet Hollywood Resort and Casino in Las Vegas and the part of a JV stake it doesn’t already own in the under-construction Horseshoe Casino in Baltimore.
CIE boss Mitch Garber (pictured) will oversee the US casino giant’s interests in the new growth-oriented venture, also becoming CEO of the Caesars Acquisition Company (CAC).
Caesars Entertainment president and CEO Gary Loveman called the transaction, which will effectively split the US casino group into two companies, “an important step” in improving its balance sheet and ability to make “strategic investments.” The company was carrying more than US$20bn in long-term debt by the end of 2012.
Following the announcement, the US casino group’s shares rose 26% in afternoon trading in New York yesterday.
US ratings agency Fitch recommended in September last year that Caesars spin off its interactive arm, including the prized World Series of Poker brand, so it could continue to meet its debt obligations.
Caesars sold an undisclosed percentage of CIE to Rock Gaming, its joint venture partner in two Ohio bricks ‘n’ mortar casinos, for US$60.8m in April last year. CIE also includes social gaming business Playtika, which operates Slotomania and other properties on Facebook.
Article written by Peter Holmes
