Tuesday, March 4, 2014

Caesars to sale 4 Casinos

DATE:               March 3, 2014
TO:                   All Employees
FROM:              Gary Loveman

Today, we announced the sale of Bally’s Las Vegas, The Cromwell, The Quad and Harrah’s New Orleans to Caesars Growth Partners, LLC as part of our ongoing efforts to address the financial condition of one of our main subsidiaries, Caesars Entertainment Operating Company, Inc. (CEOC). Caesars has faced an incredibly challenging business environment and a highly leveraged capital structure since 2008. Through the tireless efforts of everyone in the company during the last several years, we have made progress in addressing the company’s overall financial condition. Concurrently, we have expanded our network into several new jurisdictions and invested heavily in developing The LINQ and High Roller in Las Vegas, as well as upgrading amenities at many of our properties.

Despite our progress, CEOC and its subsidiaries, where most of our casinos reside, remain highly levered and in need of attention. The transaction we are announcing today is an important step in a process to repair CEOC’s balance sheet. While this process may take considerable time to achieve and will require difficult choices, I firmly believe our actions will better position Caesars for the long-term.

You may recall that Caesars Growth Partners, a joint venture with Caesars Acquisition Company, was formed last year to acquire and develop high-growth operating assets. Caesars Acquisition Company, which was also created last year as part of that process, is the managing member of Caesars Growth Partners. Caesars Entertainment, through subsidiaries, holds a majority economic stake in Growth Partners, and stands to benefit from the enhancements of the assets owned by Caesars Growth Partners. The four properties whose sale we are announcing today will strongly complement Caesars Growth Partners existing portfolio.

The sale of Bally’s Las Vegas, The Cromwell, The Quad and Harrah’s New Orleans allows us to increase liquidity at CEOC while maintaining the network value of these important properties. The sale of assets to Caesars Growth Partners will facilitate new and necessary investment in some of the purchased properties in turn enhancing their value and benefiting Caesars Entertainment and Growth Partners.

As part of the transaction, Caesars Acquisition Company has announced plans to begin a $223 million renovation of The Quad Resort & Casino. The Quad occupies a critically important space at the entrance to The LINQ development and is likely to enjoy many benefits from this considerable investment.

Caesars Entertainment and its affiliated companies will manage Bally’s Las Vegas, The Cromwell, The Quad and Harrah’s New Orleans. There will be no change in day-to-day operations. The properties remain part of our Total Rewards network.

In the event you receive questions from our customers about today’s announcement, the most important thing we can tell them is that the four properties remain a part of the Caesars family and there will be no change to the guest experience as a result of the transaction. If you receive any media or other outside inquiries regarding the transaction, please direct them to the contacts listed in the press release.

Throughout the last several years, we have sought to balance growth and investment with the efficiency and financial steps necessary to improve our financial position. We have made considerable progress in both of these efforts. We invested significantly in growth projects and undertook a number of actions designed to enhance the company’s capital structure and create value. As I assess our current position and opportunities, I am excited about many of our new customer offerings. I am proud of how far we have come and how much we have achieved.

All of us at Caesars Entertainment are extremely grateful for your continued dedication and hard work to make the company the successful enterprise it is today. On behalf of the entire Caesars family, I want to thank all of you for your enthusiasm, professionalism, and commitment to delivering outstanding service.

Please share this memo with those who don’t have Caesars email.  Thank you.

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