Dallas, Texas 04/16/2014 (FINANCIALSTRENDS) – Caesars Entertainment Corp (NASDAQ:CZR) managed to post positive 1.75 percent increase in its share price over the past week trading, there by temporarily reversing the continued slum its share price has experienced over the past six months. The renewed customer interest in the stock has occurred on the back of the resorts and clubs operation firm, reporting that it has managed to raise nearly $675 million as proceeds by selling secured debt bonds.
The debt bonds were issued by a business entity called Caesars Growth Partners which is an joint venture vehicle registered last year between Caesars Entertainment Corp (NASDAQ:CZR) and Caesars Acquisition Co. The debt notes carry an interest component of 9.375 percent and have an eight year term.
The fund infusion comes in the back drop of the struggling casino operator attempting to recast its business operations in such a manner so as to make it hard for its current creditors to call for sale of its assets to recover part of the nearly $23.3 billion in debt it has accumulated over the past few years. These new funds would be used to pay back an existing debt which was raised by its Planet Hollywood Resort & Casino which is located in Las Vegas.
It is of importance here to note that rating agency Standard & Poor’s lowered the debt rating of the casino operator on 8th April from previous CCC+ to CCC- . The new downgrades bring the bonds issued by the firm into the Junk category and indicate the negative outlook enjoyed by the firm in the eyes of the analyst community.
S&P goes on to explain that, “the capital structure is unsustainable, and the amount of cash the company will burn in 2014 and 2015 creates conditions will make a restructuring of some form more likely”.