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US – Caesars contemplates US$4bn sale of Interactive

By - 16 May 2016

Caesars Entertainment hasn’t put its Interactive division (CIE) on the market, but according to the Wall Street Journal, the deeply indebted business is listening to offers from interested parties. The article states that “Caesars Entertainment’s interactive unit is working with investment bank Raine Group to evaluate unsolicited bids that have exceeded US$4bn.”

The sale could add further complication to a labyrinthine web of financing trading that resulted in the bankruptcy of Caesars Operating Company last year. In 2015, Fortune magazine estimated Caesars Entertainment’s market value around $1.5bn, the holding company for Caesars Entertainment Operating Company (CEOC), which filed for Chapter 11 on January 15, 2015, claiming $18.4bn in debt; Caesars Entertainment Resorts Properties, which owns six casinos and the Linq; and Caesars Growth Partners, a company that acquired 10 properties from its parent in 2013-14 for $3.8bn.

Caesars Entertainment spun off the interactive business and other assets in 2013 into Caesars Growth Partners, which is controlled by Caesars Acquisition Co., a separate company set up to facilitate those transactions.

Caesars Entertainment owns a majority of Caesars Growth Partners, which in turn owns Ceasars Interactive, but Caesars Entertainment doesn’t have voting control over the interactive company. Caesars Entertainment has denied that any of its prebankruptcy transactions was improper, but will have to prove as much in court. Caesar’s has warned that litigation by some of the bondholders could force it, too, to file for Chapter 11 protection. That could make a sale another point of contention between Caesars Entertainment and creditors of CEOC.

Bondholders have criticised moves made before the filing that put CIE and other valuable assets out of their reach. They have also attacked CIE’s acquisition of World Series of Poker trademark rights. A court-appointed examiner in the bankruptcy case said there is a strong chance creditors could be awarded damages in litigation over World Series of Poker. The junior creditors at CEOC (Canyon, Oaktree, and others), remain furious that senior creditors were paid off at par while their debt was trading for pennies. They accuse management of stripping the assets from CEOC, selling them at fire-sale prices, and then using the proceeds to pay off senior creditors. The sale of CIE would only add more petrol.

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