Fitch takes a "circumspect view" of Caesars' plans to remodel Bill's Gamblin' Hall

29 October 2012

LAS VEGAS -- Fitch Ratings Service weighed in on Caesars Entertainment Inc.'s plans to spend $146 million to remodel Bill's Gamblin' Hall and Saloon, saying Friday it had a "circumspect view" of the project.

Caesars, which owns 10 casinos on or near the Strip, wants to remodel Bill's, located at the corner of the Strip and Flamingo Boulevard, which includes adding a pool and nightclub - operated by Drai Management Group - on the roof of the casino.

"The Drai's financing is consistent with Caesars' more recent transactions of carving out assets or selling assets from Caesars Entertainment to fund (capital expenditures) aimed at revitalizing the company's Las Vegas portfolio of assets," Fitch gaming analyst Michael Paladino said in a report to investors.

Caesars plans to remodel the 198 hotel rooms and the 17,200-square-foot casino at Bill's. The property, formerly known as the Barbary Coast, was opened by Michael Gaughan in 1979.

Nearby, Caesars is spending $550 million on The Linq, a 300,000-square-foot retail, dining and entertainment district that includes a 550-foot-tall observation wheel as its centerpiece.

That project includes redevelopment of the Imperial Palace as The Quad Resort and Casino.

Paladino said Fitch was concerned with the ability of the Bill's project "to ramp up to the extent that it will be able support [the] debt service on a stand-alone basis as well as the weak credit profile of Caesars Entertainment."

Caesars Entertainment has almost $20 billion in long-term debt, the highest figure of any gaming company.

"Given the novel nature of the project and significant overhaul of target customer demographic, Fitch believes any forecast is subject to considerable variance," Paladino said.

In September, Fitch released a negative report on Caesars that expressed concern over the company's debt obligations, and even hinted that the company might have to undertake some type of bankruptcy restructuring efforts.

Caesars officials have vehemently denied that company would have to take that step. The company has extended its major debt maturities into 2015.

Caesars Entertainment is expected to close the sale of its Harrah's St. Louis for $610 million in November to Penn national Gaming. A bulk of the proceeds will likely be spent on project capital expenditures and maintenance on the company Strip resorts.

Fitch assigned a "B-/RR2" rating to the $185 million in proposed term loans being issued by Caesars.

Earlier this month, Caesars Chairman Gary Loveman told analysts and investors attending the Global Gaming Expo that the company planned to undertake expansion and renovation projects in several of the company's markets, including the Strip.

Related Links
Fitch Ratings Gaming Vendor Information
Caesars Entertainment Ownership Details
The Cromwell Details


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