Caesars Falls as Loss Doubles on Jersey Writedown, SandyChristopher Palmeri
Caesars Entertainment Corp., the largest owner of U.S. casinos, fell after the company said its fourth-quarter loss more than doubled because of costs related to Hurricane Sandy and a write-off at one New Jersey property.
The shares declined 7.5 percent to $10.83 at 9:31 a.m. today in New York, after the company said yesterday it lost $469.7 million, or $3.75 a share, in the period. Caesars had risen 69 percent this year through Feb. 25 on prospects for online gambling in the U.S., while the Russell 2000 Index advanced 5.5 percent.
Hurricane Sandy cost Caesars $45 million in lost revenue from the closing of its four Atlantic City resorts for five days and its Philadelphia casino for two, the Las Vegas-based company said in a statement. Companywide, visits by loyalty-club members declined 11 percent in the period, mostly due to Atlantic City.
“The region’s economy has been slow to recover due to the devastation caused by the hurricane,” the company said in the statement.
Fourth-quarter sales declined 4.3 percent to $2.02 billion, missing estimates of $2.11 billion. Analysts had predicted a loss of $1.73 a share, the average of six estimates compiled by Bloomberg. Spending per visitor rose 6.2 percent, thanks largely to international travel to Las Vegas.
Caesars, constrained by more than $20 billion in debt, lost $220.6 million, or $1.76 a share, in the year-earlier period.
Caesars shares had risen more than 40 percent this month on the pending introduction of online gambling in Nevada and New Jersey, signs of a pickup at Las Vegas casinos and the company’s plans to sell a stake in its online operation, along with two properties. Chairman and Chief Executive Officer Gary Loveman said on a conference call no final decision has been made about the new business unit.
“You can imagine a new entity that is unencumbered with respect to debt finance that would be able to support the activities for the company’s growth,” Loveman said. “It could be a very attractive feature.”
Loveman said he expected to hear by May from the South Korean government on a proposed casino there and that the company could be offering gambling online in New Jersey in the next 18 months. The company, controlled by TPG Capital LP and Apollo Global Management Holdings LLC after their 2008 buyout, is in discussions with several suitors regarding the sale of its golf course in Macau.