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As debt mounts, Caesars in talks with lenders

By WTOP Staff

KIMBERLY PIERCEALL
Associated Press

LAS VEGAS (AP) — Caesars Entertainment said Friday it is prepared to start formal discussions with some of its bank lenders as it works to reduce its debt and stave off what some see as near certain bankruptcy.

In a filing to the Securities and Exchange Commission, the casino company announced that it has reached out to some of its creditors — namely bank lenders — to find ways to ease pressure on its $24.2 billion debt.

That came a day after the company promised its creditors who are first in line a claim on cash held by its debt-strapped subsidiary Caesars Entertainment Operating Co. in case it defaulted. It’s been in formal talks with that group of creditors, too, for about a month.

In recent years the company has spun off multiple divisions in an attempt to shape up its finances, including Caesars Entertainment Resort Properties and Caesars Growth Properties, dividing its casinos, properties and businesses among the subsidiaries. The operating company has the largest debt load.

Earlier this year, the company sold the Claridge hotel tower of its Bally’s Atlantic City property and sold the Atlantic City Country Club to a private buyer. It also closed the Harrah’s Tunica casino in Mississippi in June and shut down the Showboat Atlantic City casino in September.

For financial analysts watching the debt-heavy operations division that includes Caesars Palace on the Las Vegas Strip, the company’s trademarks and two of its remaining Atlantic City properties as well as other regional casinos, it’s not a matter of if but when the casino company will file for bankruptcy.

Caesars spokesman Gary Thompson said he couldn’t comment, citing the company’s SEC-mandated quiet period before its third quarter financial results are released Nov. 10. But CEO Gary Loveman has told the Las Vegas Review Journal before that the company has no plans for bankruptcy.

Analysts said Caesars’ actions could be an attempt to reorganize its financials outside of a federal courtroom or, if that doesn’t work, get priority creditors on its side before it inevitably files for bankruptcy.

Alex Bumazhny, a financial analyst with Fitch Ratings, said it’s going to be difficult for the company to reorganize its finances out of court or arrange a pre-packaged bankruptcy wrapped in a bow that it can take to a judge.

The tricky part, Bumazhny said, is the creditors who are second-in-line.

He said the company owes more than the company is worth to those who are first-in-line to be paid back. That leaves little for those second in line.

Those in the latter position have declared Caesars already in default of its agreements. The company dismissed the contentions in recent securities filings.

“It’s just hard to see everybody agreeing to a deal without a pretty long bankruptcy proceeding,” Bumazhny said.

Chris Snow with CreditSights pointed to $230 million in interest owed to some of the second-in-line holders of debt in December. He said if Caesars doesn’t want to pay up, it likely behooves the company to get the priority creditors on its side now rather than later while it still has attractive cash on hand.

Both analysts said it would be difficult to handicap when the company might file bankruptcy, but Bumazhny said it could be within the year. Snow said it could be imminent or into the middle of next year after the company passes the threshold of time for some transactions that the court would otherwise be able to look back on during its bankruptcy consideration.

The company has 52 casinos in the United States and abroad with most bearing the Caesars, Harrah’s and Horseshoe brand. About 68,000 people worked for the company at the end of 2013.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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