Caesars Entertainment announced that its board of directors has approved the material terms of a strategic transaction that will split the company into two entities, forming a new growth-oriented entity, Caesars Growth Partners, to be owned by Caesars and its stockholders.
The move is intended to improve the debt-heavy company’s capital structure and provide support for new projects. Private-equity firms Apollo Management LP and TPG Capital, which own Caesars, each intend to invest $250 million in the new growth-oriented business.
The transaction should provide capital to allow Caesars to continue to fund growth opportunities in a less levered and more flexible vehicle than its existing operating subsidiaries. In addition, the transaction will result in a cash infusion into Caesars Entertainment Operating Company, from the sale of certain assets to Growth Partners, including Planet Hollywood in Las Vegas and Horseshoe Baltimore, slated to open next year.
“The transaction is an important step in our ongoing efforts to improve the company’s balance sheet and position ourselves to make strategic investments,” said Gary W. Loveman, Caesars chairman and CEO. “Caesars Growth Partners and its simple and flexible capital structure provide us with a vehicle to pursue growth opportunities while retaining a significant portion of the financial upside associated with these assets and projects.”
Caesars and its affiliated companies will continue to manage Planet Hollywood and Horseshoe Baltimore, allowing these properties to be part of the Total Rewards network and benefit from Caesars’ shared services operating model.
Mitch Garber, CEO of Caesars Interactive Entertainment, will serve as CEO of CAC and continue in his role as CEO of CIE.