BUSINESS

Wynn Resorts profit up in Q4; Caesars IPO an emergency exit for shareholders?

TAGs: Caesars Entertainment, IPO, Wynn Resorts

wynn-resorts-caesars-entertainment-ipoWynn Resorts recorded net revenues of $1.34b in Q4 2011, up from $1.23b the previous year. Net income for the quarter was $190.5m, up 67% from $114.2m in 2010. The casino colossus saw revenue increases at its Macau (+9.1% to $995m) and Las Vegas (+7.2% to $348m) operations. Full year 2011 revenues were up 25.9% to $5.27b, while FY net income rose to $613.4m from just $160.1m in 2010. CEO Steve Wynn told investors that his company’s 2011’s Las Vegas revenues had finally returned to their pre-recession levels, but those insatiable analysts had been expecting overall revenues to come in a little higher. Mirroring the pattern laid down the day before by Wynn competitor Las Vegas Sands, Wynn’s stock rose 2.5% on the news, then lost 3% in after-hours trading.

Clearly missing the quarterly attention those analysts pay public companies, Caesars Entertainment has filed more paperwork with the Securities Exchange Commission to enable it to rejoin the market. Hedge fund bigwigs Apollo Global Management and TPG Capital took the company (then known as Harrah’s Entertainment) private in 2008, then made a half-hearted attempt to re-enter the market two years later that was ultimately undone by ‘market conditions’. That aborted effort was intended to raise as much as $575m, a far cry from the $50m Caesars claimed it wanted to raise when it announced the new IPO last fall.

Caesars now proposes to sell 1.8m shares (1.4% of the total) between $8-10, which would net Caesars about $13m after those pesky investment bankers (in this case, Credit Suisse and Citigroup) take their cut. The Financial Times reported that the shares being offered via the IPO belong to undisclosed investors, who (we suspect) desperately want to get the fuck out from under the company’s $19b debt load (on which Caesars paid interest of $1.4b in the first nine months of 2011). The unnamed investors will be allowed to ditch half of their remaining 22m shares following the floatation, and can dump the whole lot after 180 days. The offering puts a $1.25b valuation on Caesars, or about 7% of the $17b valuation the company enjoyed when those hedge funders took it private.

For comparison’s sake, Paddy Power is offering wagers on the IPO price for Facebook shares. The most likely outcome (10-11 odds) is a price between $35 and $44.99, but if you like long-shots, a sub-$25 share price bet is available at 10-1 and a $55+ wager can be had at 9-2. Then again, if you really prefer long shots, you might as well buy Caesars stock. (Rimshot!)

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