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In a move to restructure its debt, Caesars (NASDAQ:CZR) Entertainment, Inc. announced today that it will partially redeem $1.065 billion of its 8.125% Senior Notes due 2027. The redemption, set for October 17, 2024, will be executed at a rate of 102.031% of the principal amount, plus any accrued and unpaid interest.
This decision comes as the company has an aggregate principal amount of $1.611 billion of these notes outstanding as of June 30, 2024.
The transaction is contingent on the company receiving the net proceeds from the issuance of its 6.000% Senior Notes due 2032, which was previously announced. If the proceeds are not received in a timely manner, the redemption may be postponed or not happen at all. U.S. Bank Trust Company, National Association, is acting as the trustee and paying agent for the redemption.
This strategic financial maneuver aims to manage the company's debt obligations more efficiently. The senior notes being redeemed were originally issued at a higher interest rate, and the redemption could potentially reduce Caesars Entertainment's interest expenses, assuming the new notes carry a lower rate.
The above news is based on an SEC filing.
In other recent news, Caesars Entertainment has received a Buy rating from TD Cowen, following the company's announcement of a $500 million share repurchase program. The new initiative is seen as a strong signal from the company's management, indicating their confidence in a robust financial performance for the upcoming year. Despite this optimism, TD Cowen has adjusted its third-quarter estimates for Caesars Entertainment due to a challenging August across the company's three main segments.
InvestingPro Insights
Caesars Entertainment's debt restructuring move aligns with its current financial situation, as revealed by recent InvestingPro data. The company's market capitalization stands at $9.48 billion, with a revenue of $11.39 billion over the last twelve months as of Q2 2024. However, the company faces some financial challenges, as indicated by two key InvestingPro Tips.
Firstly, Caesars is "Not profitable over the last twelve months," which underscores the importance of the company's efforts to manage its debt and reduce interest expenses. This is further reflected in the negative Basic EPS (Continuing Operations) of -$1.29 for the same period.
Secondly, "Short term obligations exceed liquid assets," highlighting the need for careful financial management. The debt restructuring announced by Caesars could be a step towards addressing this issue by potentially lowering interest costs and improving the company's liquidity position.
On a positive note, analysts predict that Caesars will be profitable this year, according to another InvestingPro Tip. This outlook, combined with the company's strong EBITDA of $3.71 billion over the last twelve months, suggests that the debt restructuring could contribute to improved financial performance in the near future.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Caesars Entertainment, providing deeper insights into the company's financial health and market position.
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