Caesars to Repurchase Up to $500M in Stock, Sell $1B in Debt
Caesars Entertainment (NASDAQ: CZR) revealed on Wednesday that its board of directors has authorized a $500M share repurchase program and plans to issue $1 billion in corporate bonds.
This marks the gaming company’s initial fresh return of capital to shareholders in several years, aligning with earlier predictions that the casino behemoth would aim to buy back its stock while decreasing its debt. In a Form 8-K submission to the Securities and Exchange Commission (SEC), Caesars mentioned that the $500 million amount is not binding and that the initiation of the buyback plan “will be decided at a later date based on market conditions and other considerations.”
"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 higher-than-usual volume, shares of Caesars rose by over 4% following the news, continuing a surge that has seen the stock increase 17% in the last month.
Caesars Issuing Bonds to Settle Other Obligations
The Harrah’s operator also mentioned it is issuing $1 billion in corporate bonds that will mature in 2032 to help pay off current debts that are nearing maturity.
“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 issued $1.5 billion in commercial paper set to mature in 2032 to settle debts that are due next year. Even though the gaming company is introducing new debt to the market, the sale aligns with its efforts to reduce leverage, as it extends maturities and eliminates some high-yield liabilities in the process.
The debt sale by Caesars is additional proof that gaming firms have strong access to credit. In the past few weeks, competitors MGM Resorts International (NYSE: MGM) and Wynn Resorts (NASDAQ: WYNN) have introduced new bond offerings.
Caesars Provides Updates on WSOP Sale
In September, the casino operator revealed that it would be selling the intellectual property rights related to the World Series of Poker (WSOP) to investment firm NSUS Group Inc. for $500 million. Caesars mentioned in the SEC filing that the initial payment of $250 million is expected 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.
The outstanding $250 million that NSUS owes to Caesars is payable five years following the closure of the transaction.
