Caesars to Repurchase Up to $500M in Stock, Sell $1B in Debt

Posted on: October 2, 2024, 02:51h. 

Last updated on: October 2, 2024, 03:43h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Caesars Entertainment (NASDAQ: CZR) announced Wednesday that its board of directors approved a $500M share buyback program and that it will sell $1 billion in corporate bonds.

Caesars F1
Caesars Palace Las Vegas. The operator said Wednesday it could repurchase up to $500 million in stock and that it’s selling $1 billion in debt. (Image: CNN)

It’s the first new return of capital to shareholders by the gaming company in several years and meshes with previous expectations that the casino giant would look to repurchase its stock as it reduces debt. In a Form 8-K filing with the Securities and Exchange Commission (SEC), Caesars noted the $500 million figure isn’t binding and the start of the buyback plan “will be determined at a future date depending on market conditions and other factors.”

During the third quarter of 2024, the Company repurchased 3,872,478 shares of its common stock at a weighted average price per share of $36.38 under the previously disclosed $150 million common stock repurchase program authorized by its board of directors in 2018 (the “2018 Share Repurchase Program”). Following these repurchases, the Company had no remaining shares available for repurchase under the 2018 Share Repurchase Program,” according to the regulatory document.

On above-average volume, shares of Caesars gained more than 4% on the news, extending a rally that’s seen the stock pop 17% over the past month.

Caesars Selling Bonds to Retire Other Debt

The Harrah’s operator also said it’s selling $1 billion worth of corporate bonds maturing in 2032 as a means of retiring existing debt with near maturities.

“The Company intends to use the proceeds of the offering of the Notes to (i) tender, redeem or repurchase (the “2027 Notes Redemption”) a portion of the Company’s existing 8.125% Senior Notes due 2027 and (ii) to pay fees and expenses in connection with the offering of the Notes and the 2027 Notes Redemption,” it said in a statement.

In January, Caesars sold $1.5 billion of commercial paper maturing in 2032 to retire obligations coming due next year. Although the gaming firm is bringing new debt to market, the sale is consistent with its deleveraging efforts, because it’s pushing maturities out and erasing some high-yield obligations in the process.

Caesars’ debt sale is further confirmation that gaming companies enjoy solid access to credit. In recent weeks, rivals MGM Resorts International (NYSE: MGM) and Wynn Resorts (NASDAQ: WYNN) also brought new bond offerings to market.

Caesars Updates on WSOP Sale

In September, the casino operator announced the sale of the intellectual property rights associated with the World Series of Poker (WSOP) to investment firm NSUS Group Inc. for $500 million. Caesars said in the SEC filing that the first payment of $250 million should arrive before the end of this year.

As previously announced, the Company recently entered into a sale agreement with NSUS Group to sell the intellectual property (‘IP’) associated with the World Series of Poker (‘WSOP’) to NSUS Group for an aggregate of $500 million, the first $250 million of which we expect to receive in the fourth quarter of 2024. The Company expects that the substantial majority of the net proceeds of the WSOP IP sale will be used to repay secured indebtedness or reinvest in the business,” according to the filing.

The remaining $250 million owed by NSUS is due to Caesars five years after the transaction closes.