The New Jersey state Casino Control Commission (CC0) approved a plan Wednesday to allow Caesars Entertainment Operating Co. to restructure its debt through the process of outsourcing casino operations in two of its three Atlantic City properties. Caesars, who owns Bally’s and Caesars Atlantic City, will begin leasing operations of their properties to a newly formed company as part of their Chapter 11 bankruptcy reorganization.
The restructuring plan will split the existing Caesars Entertainment Operating Co. into a real estate trust and an operating company. Operations of the existing Caesars and Bally’s casino resort will be run by a newly formed management company, while the Harrah’s, also owned by Caesars, will remain unaffected by the reorganization. The Caesars real estate company will be leasing the operations to the newly created management team, so that they can retain ownership of the properties. The hope is that the newly created company will be able to revitalize the casino resorts in order to make them profitable once more, thus fixing Caesars’ financial woes.
Over the past decade, Atlantic City casinos have seen a significant decline in revenue, until recently. The decision to allow Caesars Entertainment to move forward with this restructuring plan shows a real dedication from the CCO to help restore financial stability in the city.
“After a decade of decline, Atlantic City’s casino industry is turning around,” CCC chairman and CEO Matthew B. Levinson said in an interview with Press of Atlantic City. “It is my hope that when the reorganization process is complete, Caesars and Bally’s will be able to focus on growing their business just like other operators in New Jersey.” Levinson went on to say that before the plan can move forward it must first meet a variety of approvals from the CCC, as well as the Division of Gaming Enforcement.
Caesars Entertainment Operating Co. filed for Chapter 11 bankruptcy protection in January of 2015, with a long-debt reaching a staggering total of $18.4 billion. Previously, Caesars attempted to buy off junior creditors with pennies on the dollar, however this led to retaliation from creditors, who then filed lawsuits. These lawsuits pushed for an exploration of Caesars’ hedge fund owners’ finances, which lead the owners to pump another billion or so into absolution from Caesars’ debts.
The announcement of the restructuring approval brings a glimmer of hope amidst some troubling news regarding the recent success of Atlantic City casinos. A recent report details the year-over-year 3.6 deficit in revenue for resort casinos in the city. Despite a few months of promising success, the difference of roughly $7 million could raise some eyebrows and trouble anyone involved in the Caesars Entertainment rebirth.