Tomahawk, WI 03/31/2014 (Basicsmedia) – Caesars Entertainment Corp (NASDAQ:CZR) is trying mightily to get out from under the huge debt burden of $23 billion it finds itself in and that’s going to be pretty hard in the current weak economic climate for a business that is in the gambling, hotels and restaurants business.

Taking on More Debt

Caesars Entertainment Corp (NASDAQ:CZR) wants to take on more debts to the tune of $1.3 billion via its subsidiary Caesars Growth Partners. The $1.3 billion loan is supposed to help Caesars Growth Partners acquire properties such as Bally’s Las Vegas, Harrah’s New Orleans, The Quad and The Cromwell in a $2.2 billion transaction. However, note holders of Caesars Entertainment are opposed to these plans and want to rescind the transactions that created Caesars Growth Partners. According to a story published here, the bondholders are: Canyon Capital Advisors LLC, Oaktree Capital Management LLC and Appaloosa Management LP.

Since Caesars Entertainment already has $23 billion in long-term debt, taking on more debt via subsidiaries such as Caesars Growth Partners certainly seems a risky proposition although Caesars Growth Partners has some high profile investors including TPG, Apollo Management Group, John Paulson, the hedge fund billionaire and Soros Fund Management of George Soros.

Caesars Entertainment Public Offering

It has announced a public offering of seven million shares of its common stock underwritten by Citibank. The underwriter is expected to get an option to purchase about a million additional shares of its common stock.

Financial Outlook

Caesars Entertainment has a huge gross profit margin of 49.44% but a net profit margin of
(-84.53%) which is in-line with the industry average. Although the stock price of CZR has seen a smart rise compared to where it was a year ago, the future for the stock looks bleak and risky reflected in the sharp decline of more than 20% since the beginning of March this year when it reached its 52-week high level of $26.47 on March 04, 2014. The stock has witnessed a marginal rise of 3.58% in the one year period from April 01, 2013 to March 31, 2014. The company’s net income has decreased by 274.0% on a quarter-to-quarter basis from (-$469.70) to (-$1,756.90 million).

Overall, Caesars Entertainment Corp (NASDAQ:CZR) lost more than $2.9 billion in 2013 compared to a loss of $1.5 billion in 2012. It’s going to be a hard road ahead for Caesars Entertainment as it’s difficult to see how it’s going to dig itself out of the particularly large debt hole it finds itself in.

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