US casino operator Caesars Entertainment Corporation (CEC) said Tuesday that it has reached an agreement to reduce debt at its subsidiary Caesars Entertainment Operating Company (CEOC) by $548m and cut interest expense by $34m annually.
Caesars chairman and CEO Gary Loveman said that the transaction is the latest in a series of steps intended to deleverage CEOC and position it for a potential stock listing.
“The transaction will reduce CEOC's leverage and interest payments,” said Loveman. “We are steadfast in our commitment to work constructively with creditors to deleverage CEOC and create value.”
The company will purchase and retire $238m of CEOC's outstanding 2016 and 2017 notes held by third parties, equivalent to 51 per cent not held by affiliates of CEC.
Caesars has also agreed to contribute to CEOC for retirement $393m of CEOC 2016 and 2017 notes currently held by CEC subsidiaries.
As part of the transaction, CEOC said that it received agreement for consents to amendments of certain terms of the notes and the indentures governing the notes, including a consent to the release of CEC's debt guarantee.
The proposed transaction will reduce CEOC's debt by $548m and cut interest expense by $34m annually.
Last month, Caesars appointed a new management team to head up CEOC, with John Payne taking over as chief executive after nearly 19 years with the company in various senior roles.
Shares in Caesars Entertainment Company (Co. Data) (NASDAQ:CZR) hit a new 52-week low of $11.21 per share in New York yesterday following the release of its first half results, before closing at $12.78, down 6.51 per cent in trading.