Casino operator Caesars Entertainment Corporation (CEC) lost over $2b in the second quarter of 2016 thanks to the restructuring of its bankrupt main unit.
As has been the case for the past 18 months, CEC’s numbers are irrevocably tangled given the unresolved bankruptcy of its main unit Caesars Entertainment Operating Co (CEOC). As such, the phantom entity known as ‘Continuing CEC’ no longer factors in contributions from CEOC’s 35 casino properties.
For the three months ending June 30, CEC reported revenue up 7.8% to $1.2b, while operating income fell 11.8% to $164m. Actual property earnings were down 4.6% to $335m while adjusted earnings rose 11.8% to $388m.
CEC credited the revenue gain to another stellar performance by its Caesars Interactive Entertainment (CIE) division, although this may be the last time CIE is a significant contributor to CEC’s earnings following the sale of its Playtika social and mobile gaming operation.
The six brick-and-mortar casinos under the Caesars Entertainment Resort Properties (CERP) umbrella had a bad quarter, with revenue flat at $562m and net income down more than half to $8m. Revenue at the six Caesars Growth Partners (CGP) casinos was up 8.5% to $423m while profit rose more than half to $67m thanks to the reopening of the renovated LINQ property in Las Vegas.
But none of this really matters when CEOC’s bankruptcy required CEC to sweeten its offer to CEOC’s creditors by another couple billion dollars in the hopes of convincing them to sign on to CEOC’s restructuring plan. The result was a quarterly loss of $2.08b versus a $15m profit in the same period last year, and CEC may be forced to further sweeten its offer before creditor consensus is reached.
While CEC doesn’t count CEOC’s performance in its numbers, it does break them out separately. CEOC revenue was down 3% to $1.17b while adjusted earnings rose 2% to $309m. The numbers were boosted by strong gaming volume at Caesars Palace in Vegas while regional and international casinos suffered declines.