How long can Caesars Entertainment Corp. continue to posts quarterly losses and increased debt load without running to the courts for help? That was a question being debated by investors last week when the company posted a loss of $212.2 million or $1.69 per share for the period that ended on June 30.
True, the net loss was 12 percent lower than a year ago but the debt burden reportedly rose to $23.7 billion and the company’s cash flow fails to meet the needed payments.
On that score, CEO Gary Loveman promised during the recent conference call that he is “acting aggressively to improve the company’s capital structure.”
Attempts at stretching out debt maturities are ongoing.
Also in the works is a restructuring plan that would spin off part of the company’s holdings into a separately-traded company.
Still, with some 50 gaming companies operating in North America, Caesars continues to face the problem of fewer customers spending less on gambling.
That explained why the company saw casino revenue decline by $116.8 million or 7.5 percent in the second fiscal quarter. Loveman noted that while customers may be spending less gambling they are shelling out more for the amenities.
“We have visitors that are coming to Las Vegas principally for non-gaming activities, though they may gamble a little while they are here,” Loveman said. That certainly would apply to the younger casino patrons, he said, who are increasingly turning away from gambling.
Loveman, who was lured from Harvard academia by former Harrah’s CEO Phil Satre, looked for progress from the Las Vegas Strip development called Linq project, the transformation of the former Bill’s Gamblin Hall & Saloon into the luxury Gansevoort Las Vegas, and the Nevada online gambling site.
Except for the proceeds from the sale of a property in Florida, Boyd Gaming Corp. (BYD) reported a rather flat experience for the second fiscal quarter.
The regional casino company reported earnings of $11.6 million or $0.13 per share compared to the $977,000 or a penny a share reported in 2012.
However, that included $18.9 million received from the sale of the jai-alai fronton in Florida.
Revenues were up 20 percent to $738.7 million from last year’s $614.1 million, but it also included the additional revenues generated from the recent purchase of Peninsula Gaming LLC. That amounted to $135.8 million.
Following the quarterly report, the company announced it would attack its existing debt by creating 16,500,000 shares that would be offered for sale at $12 per share. The proceeds would make it possible for the company to redeem a portion of the company debt coming due in 2016.
Food, beverage and hotel revenues were higher but a 20 percent decline in casino revenues caused the Cosmopolitan of Las Vegas to report a loss of $25.2 million in the second quarter. During the same period last year, the property reported a loss of $18.7 million.
Still, operators of the Las Vegas Strip property owned by a subsidiary of Deutsche Bank were encouraged.
In a statement issued with the report, the operators said, “We are encouraged by the increases we continue to experience in key areas of our business and pleased that the brand continues to resonate with Las Vegas visitors and locals, further establishing our position within the luxury market.”
Those areas that showed increases included food and beverages, up 8.6 percent or $7.7 million to $90 million, and hotel revenues that were up 12.1 percent to $71.1 million. The average daily room rate increased to $283.
Ray Poirier is the longtime executive editor at GamingToday.
Contact Ray at [email protected].