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Second time's a charm?





  • Ticker: CZR
  • Range: $8-$10
  • Offering: 1.8M Shares (100% primary)
  • Deal Size: $16MM
  • Over-allotment: 15% all primary
  • Pro-forma Market Cap: $1.125BN
  • Pricing: February 6th 
  • Apollo/TPG not selling any shares in IPO/ subject to a 270-day lockup
  • Selling primary shares equal to 1.4% of the total will facilitate the listing of 29% of the shares
    • The 1.4% of the shares issued in the IPO and 18.8% of the shares will be immediately tradeable post IPO
    • 8.9% of the share will be subject to a 180-day lockup (Company & 50% of Co-investor shares)
    • All of Paulson's shares (9.9%) will be listed concurrently with the IPO and not subject to lock up


  • Going public will allow them to deliver
  • Investment in CZR's will give investors exposure to:
    • Recovery of CZR's existing facilities
    • New CZR's development
    • Expect to get Baltimore license and a casino there in 2013/2014
    • Option on online poker
    • Option on Asia development (If and when new markets get approved and if CZR wins a license in those markets)
  • Launched an amend and extend proposition yesterday, which will extend maturities from 2015 from 2018. Listing of equity itself would help them deliver as well.
  • Core business recovery:
    • What has changed since 2007? 
      • Total of $2BN of investments
        • Added CZR's Palace expansion
        • New Horsheshoe Hammond
        • Planet Hollywood
      • Competitive changes (increases)
      • New projects/ developments
    • Bottom line they think that they can get to $3BN
  • Las Vegas recovery is well underway with positive momentum across all the key metrics
    • CZR's cash room rates troughed at $85/night and was $92 in 2011 and still improving
    • Occupancy troughed at 90% and improved to 96% in 2011
  • Atlantic City has been a very tough market and just reversed 39 months of declines in December.  They are continuing to work on efficiencies there.  Believe that they can get their $1.5BN business to a 20% margin
  • Regional market results have been generally stable to slightly improving.  
  • The Back To Peak slide...yes if you only they had a 40% increase in ADR they could get $200MM of EBITDA in Vegas... IF.... 
  • Anticipate adding $250MM of EBITDA from their pipeline efforts opening from 2012-2014 with little balance sheet impact
  • WSOP & US Online Poker opportunity
    • Have taken advantage of markets where gaming is legal in UK and France. When Poker Stars and Full Tilt were shut down, it benefited them
    • They also acquired a social gaming platform to distribute their brands - Playtika, developer of social gaming applications on Facebook 
    • Slotomania is on Facebook, 4 Russian social networks, iphone and ipad. IGT payed $500MM for Double Down. They have 2x as many users and monitize their users just as well as Double Down. They are launching their platforms on ipad and iphone. Slotomania is one of the top grossing apps across all mobile platforms and Facebook.
    • Launching CZR's casino application within a week (currently in beta testing) and it will linked to CZR's rewards
    • Party.BWIN's stock pop based on the their MGM/BYD announcement boosted their market cap by $600MM and they think that they deserve a similar option value that Party is getting. 
    • While they are confident of the prospect of federally legalized online poker, it is already happening at the state level
  • Real difference between this IPO and last one is that there are two real comps for the value of their options
    • IGT/Double Down for their mobile gaming business
    • Party.BWIN stock move based on their option to enter US
  • Amend and extend underway
    • Did an amend and extend for $1,2BN last year on their term loan
    • This current deal is seeking to extend at least [$2.4BN] of their term loans through 2018 from current 2015 maturities