Last week, Vince Martin talked about the recent decision of Caesars Entertainment to spin-off part-ownership of its interactive assets into a new publicly traded company that will be known as Caesars Acquisition Corporation. Because of this, in the last poll, we asked our readers if they would invest in Caesars.
Among all the votes, 69% voted ‘No Way’. Well, when you are indebted of 20.9B USD, finding investors can pose as a challenge.
13% voted, ‘Only CAC’. If they do invest in CAC, then they get shares of Planet Hollywood as well as Caesars online gambling businesses which includes the World Series of Poker. But CAC investors need to be careful, as Caesars Entertainment shareholders will call the shots.
9% voted, ‘Only CZR’. As Vince pointed out, CZR will have benefits over CAC. One theory is that if Caesars’ corporate entity goes bankrupt, shareholders can now retain ownership of the fast-growing social gaming and high-potential online gambling operations, even if the company’s land-based properties wind up being returned to Caesars bondholders in the event of a restructuring.
9% voted, ‘Both’.
The problem with the “spin-off” is that it hardly changes Caesars’ capital structure. The inclusion of Planet Hollywood does push off some near-term debt, but overall little has changed. This week, we ask our readers if the Bad Actors Clause is needed to protect the players, to keep the good operators out or if it is protectionist politics.