Caesars to Repurchase Up to $500M in Stock, Sell $1B in Debt
Caesars Entertainment (NASDAQ: CZR) declared on Wednesday that it will sell $1 billion in corporate bonds and that its board of directors has approved a $500 million share buyback program.
It's the gambling company's first new capital return to shareholders in a number of years, and it fits with earlier predictions that the massive casino would try to buy back its stock as it paid down its debt. Caesars stated that the $500 million amount is not legally enforceable and that the start of the buyback plan "will be determined at a future date depending on market conditions and other factors" in a Form 8-K filing with the Securities and Exchange Commission (SEC).
"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.
Following the news, Caesars' stock increased by over 4% on above-average volume, continuing a run that has seen the company soar 17% in the last month.
Caesars Retires Other Debt by Selling Bonds
The operator of Harrah's has announced that it is selling $1 billion in corporate notes that mature in 2032 in order to pay down its current debt that has approaching 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.
Caesars sold $1.5 billion worth of 2032-maturity commercial paper in January to pay off debt that was due the following year. The sale is in line with the gambling company's deleveraging objectives even if it is introducing fresh debt to the market because it is erasing some high-yield commitments and pushing maturities out.
Caesars' debt sale serves as more evidence that casino businesses have reliable access to credit. Rivals Wynn Resorts (NASDAQ: WYNN) and MGM Resorts International (NYSE: MGM) have also introduced fresh bond offerings in recent weeks.
Caesars' WSOP Sale Updates
The casino operator revealed in September that it has sold the World Series of Poker (WSOP) intellectual property rights to NSUS Group Inc. for $500 million. Caesars stated in the SEC filing that the $250 million initial payment is anticipated to be received by 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.
Five years after the deal concludes, Caesars will be responsible for the remaining $250 million that NSUS owes.
