Caesars Entertainment Corporation (NASDAQ:CZR) Files An 8-K Other Events
Item8.01
| Other Events. |
On May18, 2017, Caesars Entertainment Corporation (CEC)
filed a Current Report on Form 8-K (the May18
Form8-K).The May18 Form 8-K included information
regarding CECs projected credit statistics upon the emergence
from bankruptcy (the Emergence) of Caesars Entertainment
Operating Company, Inc.(CEOC).Specifically, the May18 Form
8-K projected that CEC would have $14.7billion of debt upon
Emergence, consisting of $9.6billion of indebtedness for borrowed
money and a capitalized lease obligation of $5.1billion (yielding
projected net leverage ratio of 5.7X).The capitalized lease
obligation relates to the lease (the Lease) to be entered
into between CEOC upon Emergence (New CEOC) and the real
estate investment trust (REIT) being formed in connection with
CEOCs reorganization (Propco).The amount of the
capitalized lease obligation was determined by multiplying
estimated annual lease payments of $640million times 8.0 (the
Assumed Value of the Capitalized Lease Obligation). A
revised version of a portion of the materials previously
furnished with the May18 Form 8-K is attached hereto as Exhibit
99.1.
As described in
the Amendment No.1 to Form S-4 (the Amended Form S-4)
filed by CEC today, upon Emergence CEC expects to recognize
approximately $8.2billion of failed sale-leaseback financing
obligations in respect of the Lease (rather than $5.1 billion) as
a result of certain accounting rules that require the estimated
fair value of the property underlying the Lease to be determined
by reference to its value determined from the perspective of
Propco (which drives a higher valuation due to the tax-advantaged
status and lower cost of capital of a REIT).
CEC intends to
continue to discuss debt upon and following Emergence (and
related credit statistics) by reference to indebtedness for
borrowed money plus the Assumed Value of the Capitalized Lease
Obligation despite the fact that the Assumed Value of the
Capitalized Lease Obligation is not a financial measure
determined in accordance with GAAP. Management uses, and believes
that the Assumed Value of the Capitalized Lease Obligation is
useful for investors, because it reflects a liability based on
the future cash outflows, is consistent with the financial
reporting of certain similarly situated companies that disclose a
liability based on the present value of future cash outflows
under similar leases and helps investors understand the future
cash outflows and liquidity position of CEC following
Emergence.It is not preferable to GAAP results, nor is it
necessarily indicative of future performance or of the results
that would be reported should Emergence occur.
Important
Additional Information
to the Amended and
Restated Agreement and Plan of Merger, dated as of July9, 2016,
between CEC and Caesars Acquisition Company (CAC), as
subsequently amended on February20, 2017 (as amended, the
Merger Agreement), among other things, CAC will merge with
and into CEC, with CEC as the surviving company (the
Merger). In connection with the Merger, on June5, 2017,
CEC and CAC filed with the Securities and Exchange Commission
(SEC) the Amended FormS-4that includes a preliminary joint
proxy statement/prospectus, as well as other relevant documents
concerning the proposed transaction. The registration statement
has not yet become effective. After the registration statement is
declared effective by the SEC, a definitive joint proxy
statement/prospectus will be mailed to stockholders of CEC and
CAC. Stockholders are urged to read the registration statement
and joint proxy statement/prospectus regarding the Merger and any
other relevant documents filed with the SEC, as well as any
amendments or supplements to those documents, because they will
contain important information. You will be able to obtain a free
copy of such joint proxy statement/prospectus, as well as other
filings containing information about CEC and CAC, at the SECs
website (www.sec.gov), from CEC Investor Relations
(investor.caesars.com) or from CAC Investor Relations
(investor.caesarsacquisitioncompany.com).
The information in
this communication is for informational purposes only and is
neither an offer to purchase, nor a solicitation of an offer to
sell, subscribe for or buy any securities or the solicitation of
any vote or approval in any jurisdiction to or in connection with
the proposed transactions or otherwise, nor shall there be any
sale, issuance or transfer of securities in any jurisdiction in
contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
Section10 of the Securities Act of 1933, as amended, and
otherwise in accordance with applicable law.
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CEC, CAC and their
respective directors, executive officers and certain other
members of management and employees may be soliciting proxies
from CEC and CAC stockholders in favor of the business
combination transaction. Information regarding the persons who
may, under the rules of the SEC, be considered participants in
the solicitation of the CEC and CAC stockholders in connection
with the proposed business combination transaction is set forth
in the definitive proxy statement filed with the SEC on April12,
2017 and Amendment No.1 to the Annual Report on Form10-Kfor CACs fiscal year
ended December31, 2016, filed on March31, 2017, respectively. You
can obtain free copies of these documents from CEC and CAC in the
manner set forth above.
Forward-Looking
Statements
This filing includes
forward-looking statements intended to qualify for the safe
harbor from liability established by the Private Securities
Litigation Reform Act of 1995. You can identify these statements
by the fact that they do not relate strictly to historical or
current facts and by the use of words such as will, proposed,
may, projected or the negative or other variations thereof or
comparable terminology. In particular, they include statements
relating to, among other things, the emergence from bankruptcy of
Caesars Entertainment Operating Company, Inc. (CEOC) and
the expected timing thereof, future actions that may be taken by
CEC and others with respect thereto, the completion of the Merger
and projected results of operations. These forward-looking
statements are based on current expectations and projections
about future events.
You are cautioned that
forward-looking statements are not guarantees of future
performance or results and involve risks and uncertainties that
cannot be predicted or quantified and, consequently, the actual
performance and results of CEC may differ materially from those
expressed or implied by such forward-looking statements. Such
risks and uncertainties include, but are not limited to, the
following factors, as well as other factors described from time
to time in our reports filed with the SEC: CECs and CEOCs ability
(or inability) to meet any milestones or other conditions set
forth in their restructuring support agreements, CECs and CEOCs
ability (or inability) to satisfy the conditions to the
effectiveness of the Third Amended Joint Plan of Reorganization
of CEOC and its Chapter 11 debtor subsidiaries, CECs ability (or
inability) to secure additional liquidity to meet its ongoing
obligations and its commitments to support the CEOC restructuring
as necessary, CECs financial obligations exceeding or becoming
due earlier than what is currently forecast and other risks
associated with the CEOC restructuring and related
litigation.
You are cautioned to not place
undue reliance on these forward-looking statements, which speak
only as of the date of this filing. CEC undertakes no obligation
to publicly update or release any revisions to these
forward-looking statements to reflect events or circumstances
after the date of this filing or to reflect the occurrence of
unanticipated events, except as required by law.
| Item9.01 | Financial Statements and Exhibits. |
(d)Exhibits.
The following exhibit is being filed herewith:
|
Exhibit No. |
Description |
|
| 99.1 | Updated Slide 36 from May18 Form 8-K. |
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About Caesars Entertainment Corporation (NASDAQ:CZR)
Caesars Entertainment Corporation (Caesars) is a holding company. The Company offers casino-entertainment and hospitality services. It operates through three segments: Caesars Entertainment Resort Properties (CERP), Caesars Growth Partners Casino Properties and Developments (CGP Casinos) and Caesars Interactive Entertainment, Inc. (CIE). The Company’s facilities include gaming offerings, food and beverage outlets, hotel and convention space, and non-gaming entertainment options. In addition to its brick and mortar assets, it operates an online gaming business that provides social and mobile games offerings that utilize virtual currency, as well as real money games in certain jurisdictions. The Company owns CERP and an interest in Caesars Growth Partners, LLC (CGP). Through its consolidated entities, it owns and operates approximately 10 casinos in the United States, with over one million square feet of gaming space and over 23,000 hotel rooms. Caesars Entertainment Corporation (NASDAQ:CZR) Recent Trading Information
Caesars Entertainment Corporation (NASDAQ:CZR) closed its last trading session up +0.90 at 12.45 with 7,239,858 shares trading hands.
