July 17 (Reuters) – RBC Capital Markets initiated coverage
of casino operator Caesars Entertainment Corp with an
“underperform” rating, saying weak regional gaming growth and
concerns over the company’s debt load will weigh on the stock.
The company’s shares fell as much as 10 percent following
the brokerage action. They closed down nearly 6 percent at $8.50
on Tuesday on the Nasdaq.
Increasing competition in Las Vegas is also hurting the
company’s business, analyst John Kempf said in a client note.
Kempf called Caesars’s debt burden “onerous” and said it is
difficult to imagine how credit measures could improve anytime
soon.
“True, there are minimal debt maturities through 2014, but
about $8 billion comes due in 2015. This will be difficult to
refinance cheaply given the company’s complex capital structure
and restrictive covenants, and could potentially result in even
higher interest payments,” Kempf said.
Caesars, which was taken private by Apollo Global Management
and TPG Capital in 2008, was forced to delay its listing
in 2010 because of its debt load, but finally went public this
February.
Las Vegas, Nevada-based Caesars had debt of $22.65 billion
at the end of 2011.
(Reporting by Aditi Shrivastava and Juhi Arora in Bangalore;
Editing by Viraj Nair)
