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Caesars Entertainment has ‘mixed views’ about how quickly to de-lever
By Devika Patel
Knoxville, Tenn., Sept. 13 – Caesars Entertainment Corp. plans to de-lever by the end of 2021, but has “mixed views” about how long it should take the company to de-lever.
“We have a goal to de-lever the company by the end of 2021,” executive vice president and chief financial officer Eric Hession said at the Bank of America Merrill Lynch 2018 Gaming & Lodging Conference in New York on Thursday.
Although the company plans to de-lever, it has “mixed views” on the optimal pace of the deleveraging.
Hession said there’s some view among the company’s executives, its advisers and its shareholders that deleveraging faster “would create additional equity value, and there’s some view that we should get there slower and divert more cash to repurchasing shares.”
“There’s absolutely a mixed view as to what that is,” he said.
“We really feel like a balanced approach is the best way to look at it and taking advantage of changes in the market but if there’s an environment that causes us to de-lever faster or would want us to de-lever faster, we certainly have the capability,” he said.
The company is spending a lot right now and can use that capital instead to de-lever if it sees that as an attractive alternative use for its capital.
“We’re spending a ton of capital,” Hession said.
“We’re spending over $800 million in total this year and next year, although our base capital is falling, we’re still spending on the convention center and capital is certainly a lever.
“We can defer projects if the IRR of the alternative uses is higher,” he said.
Caesars is a Las Vegas-based full-service gaming and entertainment company.
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