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Imperial Capital Thinks Caesars Entertainment May File For Bankruptcy

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Caesars Entertainment (NASDAQ: CZR) debt is unsustainable and the company could be headed for a bankruptcy filing, one analyst said Wednesday.

Moreover, the company is likely to soon propose a debt for equity swap to a group of first-lien bondholders that could significantly dilute the value of its shares, Imperial Capital's Gregg Klein said Wednesday.

Klein and others have made similar recent warnings. But on Wednesday, Klein cut his price target on the company to $7, from $9, maintaining a Hold rating.

Klein noted his target is now 33 percent below Caesar's recent share price. The shares traded Wednesday afternoon at $13.34, down 2.6 percent.

Short interest in Caesars recently more than tripled during the first two weeks of August to 2.8 million of its 13.7 million shares outstanding.

Although Klein thinks Caesars' shares could be worth as much as $16.75 a piece, the company's debt "isn't sustainable" and the company "could be headed for a bankruptcy filing."

Klein believes Caesars is trying to strike a deal to swap all or part of its $9 billion of first-lien debt for equity.

But a group of Caesars second-lien bondholders that includes hedge funds Appaloosa Management and Oaktree Capital recently sued Caesars, claiming the company fraudulently transferred assets from the entity that issued the $5 billion in second-lien debt.

Caesars countersued the second-lien group, claiming the group is trying to push the company into default.

Latest Ratings for CZR

DateFirmActionFromTo
Jun 2019DowngradesOverweightEqual-Weight
Jun 2019DowngradesBuyHold
Jun 2019DowngradesBuyNeutral

View More Analyst Ratings for CZR
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