August 14, 2013
Sells off lonely Macau golf course for $438 million
The casino operator sold its 175-acre golf course near the Chinese gaming enclave’s Cotai Strip region for $438 million to an Asian developer.
The deal, which was disclosed within the company’s quarterly report filing with the U.S. Securities and Exchange Commission, is expected to close by the end of the year.
Caesars said it entered into a purchase agreement [last] week with Pearl Dynasty Investments Ltd. The buyer paid Caesars $65.7 million as a deposit for the land. Caesars can retain 10 percent of the purchase price, $43.8 million, if the deal collapses.
The company said it would use the proceeds from the transaction, which it estimates to be $420 million, to pay down debt. Caesars Entertainment has a gaming industry-high of $23.7 billion in long-term debt.
The company did not comment on the deal beyond the SEC filing.
In 2007, Caesars, which does not have a Macau gaming license, paid $578 million for the land, the site of the Macau Golf Course, with the intent to develop a hotel-casino complex.
But the Macau government never awarded additional gaming concessions and has not shown intent to increase the number of licenses beyond the current six concessions and sub-concessions.
Caesars, then known as Harrah’s Entertainment, never submitted an application in the Macau licensing process in 2001 after the Chinese government ended a 40-year monopoly in Macau that was controlled by Hong Kong billionaire Stanley Ho.
MGM Resorts International, Wynn Resorts Ltd. and Las Vegas Sands Corp. all operate resorts developments in Macau.
Caesars Entertainment Chairman Gary Loveman, who turned down a deal to acquire Wynn’s sub-concession in 2006, has said not entering the Macau gaming market was the biggest mistake the company ever made.
Macau gaming revenue was a record $38 billion in 2012, more than six times the revenue produced by Las Vegas casinos. The Macau gaming market is up 16 percent through the first seven months of 2013.
Caesars renamed the development Caesars Golf. Last year, the company took a $101 million write-down on the land when it put up the site for sale.
Shares of Caesars closed at $18.36 on the Nasdaq Global Select, up 75 cents or 4.26 percent. Caesars stock has more than doubled in value this year, and at one point Friday, reached an all-time high of $18.76.
Caesars is in the process of spinning off Planet Hollywood Resort, its interactive gaming business and a planned Baltimore casino into a separate company majority owned by the gambling giant.
In an SEC filing in July, company officials said they would raise $1.18 billion from selling stock for the new public entity.
Contact reporter Howard Stutz at email@example.com or 702-477-3871. Follow @howardstutz on Twitter.