Caesars Entertainment has vowed to spend at least $5b should Japanese legislators feel crazy enough to award the company a casino license. Caesars CEO Gary Loveman insisted that the company would have “no trouble raising the finance for a world-class facility in Tokyo,” telling Bloomberg that “you can typically finance a very substantial portion of that value through the debt market.” And Loveman ought to know, what with Caesars carrying an industry-high debt load of nearly $24b,
Steven Tight, Caesars president for international development, said the company had held talks with potential Japanese casino partners, including Fuji Television Network, Kajima Corp and Mistui Fudosan Co. Those three companies have previously announced a partnership to build a resort casino on Odaiba, the artificial island in Tokyo Bay.
Of course, there’s the small matter of whether Japan would choose to risk one of its coveted casino licenses on a company with such shaky financial underpinnings. Earlier this month, some of Caesars’ many bondholders hit the company with a notice of default, which they say was triggered by Caesars sale this May of 5% of parent company Caesars Entertainment Operating Co. (CEOC) to undisclosed institutional investors.
Caesars claims that the sale legally frees them from honoring some of their debts in the wake of a restructuring. The sale was part of a refinancing plan that also shifted Ceasars’ more profitable assets – including its social gaming and online gambling operations – out of CEOC and into Caesars Growth Partners (CGP). This has led creditors to protest that CEOC was becoming a sinkhole of toxic assets but Caesars has repeatedly stated it doesn’t believe the creditors’ claims have any merit.
Earlier this week, the irate bondholders asked Illinois gaming regulators to block Caesars’ refinancing plans. Caesars operates two casinos in the state, which gives regulators a say in how the company conducts its affairs. The Illinois Gaming Board was set to discuss the issue at its meeting on Thursday but the matter was pulled from the agenda, ostensibly due to the absence of board member Lee Gould. Board administrator Mark Ostrowski announced that the issue would be discussed at a future meeting, possibly on July 23 or 24.
Meanwhile, Caesars has filed an appeal of the dismissal of its lawsuit against Massachusetts Gaming Commission (MGC) chairman Stephen Crosby. Caesars had accused Crosby of interfering with their bid for a Boston-area casino license in order to favor a rival bid by Wynn Resorts. This claim was rejected last month by US District Judge Nathaniel Gorton, who rubbished Caesars’ “improbable conspiracy theories.” The state’s voters may end up repealing the law allowing casinos to be built in Massachusetts when they go to the polls this November, meaning Caesars may well be chasing a phantom.
