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UPDATE 3-Caesars IPO pricing delayed due to "glitch" - underwriter
February 7, 2012 / 12:50 AM / in 6 years

UPDATE 3-Caesars IPO pricing delayed due to "glitch" - underwriter

By Brenton Cordeiro and Stephen Lacey

Feb 6 (Reuters) - The pricing of the initial public offering of Caesars Entertainment Corp, one of the largest casino operators in the United States and owner of the famed Caesars Palace, has been delayed due to a “technical glitch,” an underwriter said.

The delay resulted from last-minute comments the underwriters received from regulators relating to the IPO prospectus.

The banks were expected to price the offering on Monday evening, but are now hoping to price on Tuesday with the goal of opening trading on the Nasdaq sometime in the afternoon, according to sources close to the process.

If they are unable to price by mid-afternoon, the banks are likely to push off pricing until after the close on Tuesday for Wednesday trading, the sources said.

Credit Suisse and Citigroup are leading underwriters on the offering.

The company plans to sell 1.8 million shares in its IPO at between $8 and $10 each. Pricing is likely to come within the indicative range.

The shares being offered by Caesars make up just 1.4 percent of the company’s total float. It expects net proceeds of $13.1 million from the IPO, based on the midpoint of the expected price range.

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Certain shareholders, including hedge fund Paulson & Co that owns 9.9 percent of Caesars, have registered to sell up to $223.4 million of the stock they own in Caesars in additional share sales.

Caesars’ private equity owners Apollo Global Management LLC and TPG Capital LP, would continue to hold 70.1 percent of the company after the offering, according to filings with the U.S. Securities and Exchange Commission.

Caesars’ $31 billion leveraged buyout by Apollo Global and TPG Capital in 2008 left the company severely debt-laden. It had about $22.5 billion of outstanding debt on its books as of Sept. 30.

At the high end of the estimated price range, Caesars would have a market value of about $1.25 billion, a fraction of the price tag it commanded when it was taken private.

“We view the Caesars IPO as unattractive due to the company’s concentration of revenue and cash flow in the unattractive U.S. casino industry, its lack of exposure to the attractive Asian casino industry, its highly leveraged balance sheet, and valuation concerns,” Morningstar analyst Chad Mollman said.

Caesars, had filed for an IPO in 2010 under its former name, Harrah’s Entertainment, but had to ditch the plans as the company’s debt became too much for investors to handle.

Caesars posted a net loss of $467 million on net revenue of $6.66 billion, for the nine months ended Sept. 30.

Caesars operates 52 casinos, mainly in the United States and England, and also owns a golf course in Macau - the world’s largest gambling destination.

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