LAS VEGAS, Dec. 22, 2014 /PRNewswire/ -- Caesars
Entertainment Corporation (NASDAQ: CZR) ("Caesars Entertainment")
and Caesars Acquisition Company (NASDAQ: CACQ) ("Caesars
Acquisition") today announced that they have entered into a
definitive agreement to merge in an all-stock transaction. The
merged company will be one of the largest gaming and entertainment
companies in the world. Upon completion of the merger and the
proposed restructuring of Caesars Entertainment Operating Company,
Inc. ("CEOC"), the merged company will be well capitalized and
positioned for sustainable long-term growth and value creation.
Upon the completion of the transaction, Caesars Entertainment will
own a collection of high-growth assets, including properties in
destination markets and a majority stake in Caesars Interactive
Entertainment, Inc. ("CIE"), and will operate a valuable network of
domestic and international resorts and casinos.
The merged company will be the preeminent gaming and hospitality
company in Las Vegas. It will
operate Caesars Palace and own 11 properties there, including nine
casino resorts and the LINQ promenade and High Roller observation
wheel. The merged company will also own CIE, Harrah's New Orleans, Harrah's Atlantic City, Harrah's Laughlin and Caesars Acquisition's current
equity interest in Horseshoe Baltimore. All of the company's
properties will remain connected via the Total Rewards loyalty
network.
The planned merger of Caesars Entertainment and Caesars
Acquisition will also support the proposed restructuring of CEOC, a
subsidiary of Caesars Entertainment. CEOC announced on December 19, 2014, that it and Caesars
Entertainment had reached an agreement with CEOC's first lien
noteholder steering committee regarding the terms of a
comprehensive financial restructuring plan that will substantially
reduce debt and lower interest payments. The successful completion
of the merger will position the merged company to support the
restructuring of CEOC without the need for any significant outside
financing. The strength of the merged company will position it to
be a strong guarantor for the restructured CEOC's obligations,
including lease payments its "OpCo" subsidiary will make to
"PropCo."
"The merger of Caesars Entertainment and Caesars Acquisition
solidifies our focus on owning assets in destination and
high-growth markets and businesses, while maintaining the benefits
of operating our network and the Total Rewards loyalty program,"
said Gary Loveman, Chairman and
Chief Executive Officer of Caesars Entertainment. "Upon completion
of the merger and restructuring, Caesars Entertainment Corp.
entities will be financially strong, with significantly reduced
leverage and a much simpler and straightforward corporate
structure."
On a pro-forma basis, the merged company will have a combined
market capitalization of $3.2
billion, based on closing prices on December 19, 2014. The merged company will have a
combined cash balance of $1.7 billion
(excluding cash at CEOC). As of September 30, 2014, Caesars Growth Partners, LLC
("Caesars Growth Partners") had approximately $1.0 billion of cash and net leverage of
3.2x. Pro forma for the merger and the proposed restructuring
of CEOC, all Caesars-owned entities (including CEOC "OpCo") will be
reasonably leveraged and produce positive free cash flow. The
merged company will produce positive free cash flow on a
consolidated basis.
Pursuant to the terms of the merger agreement, and subject to
the overall restructuring of CEOC, regulatory approval and other
closing conditions, each outstanding share of Caesars Acquisition
class A common stock will be exchanged for 0.664 share of Caesars
Entertainment common stock, subject to adjustments set forth in the
merger agreement, which would result in Caesars Entertainment
stockholders owning approximately 62% of the combined company on a
fully-diluted basis and Caesars Acquisition stockholders owning
approximately 38%. No new debt will be issued in connection with
the merger.
The merged company will continue to be controlled by affiliates
of Apollo Global Management and TPG Capital. Based on each of the
company's records, approximately 90% of the stockholders of Caesars
Entertainment also own shares of Caesars Acquisition, and vice
versa, implying significant overlap in the stockholders of the two
companies.
Loveman will be Chairman and CEO of the combined company and has
agreed to a new employment agreement that extends his tenure until
the end of 2016. Loveman will oversee the restructuring of CEOC and
continue to focus on recruiting senior talent to Caesars.
Mitch Garber, CEO of Caesars
Acquisition, will be CEO of CIE. Following the merger, Garber will
join the Board of Directors of Caesars Entertainment as Vice
Chairman and will assume an expanded leadership role on a
project-specific basis across the Company.
The merged company will conduct business as Caesars
Entertainment and continue to trade on the NASDAQ under the ticker
CZR.
The merger agreement was negotiated and unanimously recommended
by the Caesars Entertainment and Caesars Acquisition special
committees, each comprised solely of independent members of their
respective boards of directors. Centerview Partners served as the
exclusive financial advisor to the special committee of Caesars
Entertainment and Reed Smith LLP served as the committee's legal
counsel. Moelis & Company LLC served as the exclusive financial
advisor to the special committee of Caesars Acquisition and
Skadden, Arps, Slate, Meagher & Flom LLP served as the
committee's legal counsel.
About Caesars Entertainment
Caesars Entertainment Corporation (CEC) is the world's most
diversified casino-entertainment provider and the most
geographically diverse U.S. casino-entertainment company. CEC is
mainly comprised of the following three entities: the majority
owned operating subsidiary Caesars Entertainment Operating Company,
wholly owned Caesars Entertainment Resort Properties and Caesars
Growth Properties, in which we hold a variable economic interest.
Since its beginning in Reno,
Nevada, 75 years ago, CEC has grown through development of
new resorts, expansions and acquisitions and its portfolio of
subsidiaries now operate 50 casinos in 13 U.S. states and five
countries. The Company's resorts operate primarily under the
Caesars®, Harrah's® and Horseshoe® brand names. CEC's portfolio
also includes the London Clubs International family of casinos. CEC
is focused on building loyalty and value with its guests through a
unique combination of great service, excellent products,
unsurpassed distribution, operational excellence and technology
leadership. The Company is committed to environmental
sustainability and energy conservation and recognizes the
importance of being a responsible steward of the environment. For
more information, please visit www.caesars.com.
About Caesars Growth Partners
Caesars Growth Partners is a casino asset and entertainment
company focused on acquiring and developing a portfolio of
high-growth operating assets and equity and debt investments in the
gaming and interactive entertainment industry. Through its two
businesses—Interactive Entertainment and Casino Properties and
Developments—Caesars Growth Partners will focus on acquiring or
developing assets with strong value creation potential and
leveraging interactive technology with well-known online brands.
Assets include Caesars Interactive Entertainment (with its social
and mobile games, the World Series of Poker and regulated online
real money gaming businesses), Planet Hollywood, Bally's and
Cromwell (located in Las Vegas,
Nevada), Horseshoe Baltimore, and Harrah's New Orleans. Through its relationship with
Caesars Entertainment Corporation (NASDAQ: CZR), Caesars Growth
Partners has the ability to access Caesars Entertainment
Corporation's proven management expertise, brand equity, Total
Rewards loyalty program and structural synergies. For more
information, please visit www.caesarsacquisitioncompany.com.
About Caesars Acquisition Company
Caesars Acquisition Company (NASDAQ: CACQ) was formed to make an
equity investment in Caesars Growth Partners, a joint venture
between CACQ and Caesars Entertainment Corporation (NASDAQ: CZR),
the world's most diversified casino entertainment provider and the
most geographically diverse U.S. casino-entertainment company. CACQ
is Caesars Growth Partners' managing member and sole holder of all
of its outstanding voting units. For more information, please visit
www.caesarsacquisitioncompany.com.
Forward Looking Information
This release contains or may contain "forward-looking
statements" intended to qualify for the safe harbor from liability
established by the Private Securities Litigation Reform Act of
1995. You can identify these statements by the fact that they do
not relate strictly to historical or current facts. These
statements contain words such as "may," "will," "might," "expect,"
"intend," "could," "would," or "estimate," or the negative of these
words or other words or expressions of similar meaning may identify
forward-looking statements and are found at various places
throughout this press release. These forward-looking statements,
including, without limitation, those relating to the merger and the
CEOC restructuring plan, wherever they occur in this release, are
based on Caesars Entertainment's and Caesars Acquisition's current
expectations about future events and are necessarily estimates
reflecting the best judgment of management and involve a number of
risks and uncertainties that could cause actual results to differ
materially from those suggested by the forward-looking
statements.
Investors are cautioned that forward-looking statements are not
guarantees of future performance or results and involve risks and
uncertainties that cannot be predicted or quantified, and,
consequently, actual results may differ materially from those
expressed or implied by such forward-looking statements. Such
risks and uncertainties include, but are not limited to, the
following factors, as well as other factors described from time to
time in Caesars Entertainment's and Caesars Acquisition's reports
filed with the Securities Exchange Commission (including the
sections entitled "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
contained therein):
- the merger agreement may not be approved by the Caesars
Entertainment and Caesars Acquisition stockholders, respectively,
at the respective special meetings or the failure to satisfy any of
the other closing conditions of the merger agreement;
- the merger may not be consummated or one or more events,
changes or other circumstances that could occur that could give
rise to the termination of the Merger Agreement;
- the ability to retain key employees during the CEOC
restructuring;
- the price of, market for and potential market price volatility
of Caesars Acquisition's and of Caesars Entertainment's common
stock;
- CEOC's significant liquidity requirements and substantial
levels of indebtedness;
- increased costs of financing, a reduction in the availability
of financing and fluctuations in interest rates in connection with
the restructuring;
- economic, business, competitive, and/or regulatory factors
affecting the businesses of Caesars Acquisition and Caesars
Entertainment and their respective subsidiaries generally;
- the effects of CEOC's bankruptcy filing on CEOC and its
subsidiaries and affiliates, including Caesars Entertainment, and
the interests of various creditors, equity holders and other
constituents;
- the event that the CEOC restructuring support agreement may not
be consummated in accordance with its terms, or persons not party
to the CEOC restructuring support agreement may successfully
challenge the implementation thereof;
- the effect of bankruptcy court rulings in Chapter 11 cases and
the outcome of such cases in general;
- the length of time CEOC will operate under the Chapter 11 cases
or CEOC's ability to comply with the milestones provided by the
CEOC restructuring support agreement;
- risks associated with third party motions in Chapter 11 cases,
which may hinder or delay CEOC's ability to consummate its
restructuring plan as contemplated by the CEOC restructuring
support agreement;
- the potential adverse effects of Chapter 11 proceedings on
CEOC's liquidity or results of operations;
- the impact of CEOC's substantial indebtedness and the
restrictions in CEOC's debt agreements;
- litigation outcomes and judicial and governmental body actions,
including gaming legislative action, referenda, regulatory
disciplinary actions, and fines and taxation, including but not
limited to, the assertion and outcome of litigation or other claims
that may be brought against CEC and CEOC by certain creditors, some
of whom have notified CEC and CEOC of their objection to various
transactions undertaken by CEC and CEOC in 2013 and 2014;
- the effects of local and national economic, credit and capital
market conditions on the economy in general, and on the gaming
industry in particular;
- changes in laws, including increased tax rates, smoking bans,
regulations or accounting standards, third-party relations and
approvals, and decisions, disciplines, and fines of courts,
regulators, and governmental bodies;
- the effects of competition, including locations of competitors,
competition for new licenses and operating and market
competition;
- abnormal gaming holds ("gaming hold" is the amount of money
that is retained by the casino from wagers by customers);
- construction factors, including delays, increased costs of
labor and materials, availability of labor and materials, zoning
issues, environmental restrictions, soil and water conditions,
weather and other hazards, site access matters, and building permit
issues;
- access to insurance on reasonable terms for CEC and CEOC's
assets; and
- the impact, if any, of unfunded pension benefits under
multi-employer pension plans.
You are cautioned to not place undue reliance on these
forward-looking statements, which speak only as of the date of this
release. Caesars Entertainment and Caesars Acquisition
undertake no obligation to publicly update or release any revisions
to these forward-looking statements to reflect events or
circumstances after the date of this release or to reflect the
occurrence of unanticipated events, except as required by law.
Source: Caesars Entertainment Corporation and Caesars
Acquisition Company
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SOURCE Caesars Entertainment Corporation; Caesars Acquisition
Company