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September 18, 2014

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S&P lowers rating on Caesars Entertainment

Image

Christopher DeVargas

An exterior view of Caesars Palace, June 6, 2013.

NEW YORK — Standard & Poor's Ratings Services on Tuesday lowered its rating for Caesars Entertainment Corp. and said that it is more likely that the casino operator will need to undergo a restructuring.

The Las Vegas-based company, which runs the Caesars, Harrah's, and Horseshoe brands, has struggled since the recession, and has not posted a profit since 2009.

S&P lowered its corporate credit rating on Caesars and some of its subsidiaries two notches to CCC- from CCC+, keeping it in junk grade territory. The outlook is negative, indicating the rating could be lowered further.

The rating agency said Caesars' capital structure is unsustainable, and the amount of cash the company will burn in 2014 and 2015 creates conditions that it believes will make a restructuring of some form more likely. It anticipates the company will burn more than $1.2 billion in cash in 2014 and will not have sufficient liquidity in 2015 for its needs without more asset sales or gaining access to the capital markets.

Caesars declined to comment.

Despite the downgrade and outlook, shares of the company rose 47 cents, or 2.7 percent, to $17.78 in afternoon trading amid a broader market uptick. Its shares have fallen almost 25 percent so far this year through Monday's close.

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