Caesars Entertainment Corp. raised $16.3million from its IPO earlier today amidst doubts over the future of a casino firm that isn’t in the gambling industry’s biggest location. 1.81m shares were sold at $9 apiece – the middle of the price at which they were offered last week. The shares are trading on the Nasdaq Stock Market under the symbol CZR and proceeds will be used for general purposes including development projects, acquisitions and maintenance expenses.
It now gives other investors the chance to stick their shares on the block – but only in small amounts. The likes of Paulson & Co. (9.9% owners), Goldman Sachs and Deutsche Bank can now sell a number of shares with the former allowed to offer 12.4m and the other two able to get rid of 22.3m (worth $201m at the offer price). According to Bloomsberg, Caesars did withdraw a registration filing to sell up to $500m in shares after the IPO. This was confirmed by the amended filing two days ago that contained no mention of the $500m shares.
In terms of market value the IPO has the firm at $1.13billion and an enterprise value of $22.5bn – 11.8 times the EBITDA of $1.92bn. This is something that got some chins wagging with Chris Snow, senior analyst at CreditSights Inc, picking out why the valuation might be a little heady.
“The long-term debate about whether they deserve the multiple is valid because Caesars doesn’t have casino operations in Macau. The valuation is ‘pretty aggressive.’”
However outlandish either of those two valuations is, it doesn’t detract from the well-known fact the firm has quite the mound of debt in its locker. This makes the likelihood of other shareholders selling up very likely and they’ll be left figuring out what they should do next.
