Caesars Entertainment Corp. (CZR:US), the U.S. casino company saddled with $23.7 billion of debt, agreed to sell a piece of land in Macau to Pearl Dynasty Investments Ltd. for $438 million.
The Las Vegas-based company expects net proceeds of about $420 million from the disposal, which it will use to fund capital expenditures or buy back outstanding debt obligations, it said in a filing today.
Caesars last year decided to sell the land after a five-year wait for government permission to build a casino in Macau. The company, the largest owner of U.S. casinos, has been shut out of Macau after lagging competitors in applying for a license in the Chinese city. Gambling revenue in Macau is expected to surge to $44.5 billion this year from $38 billion in 2012, according to Deutsche Bank AG.
Caesars gained 4.2 percent to $18.35 at 3:21 p.m. in New York, after earlier rising as much as 6.4 percent after announcing the disposal. The stock has more than doubled this year.
Six companies, including Las Vegas Sands Corp. (LVS:US), MGM Resorts International (MGM:US) and Wynn Resorts Ltd. (WYNN:US) now hold concessions and operate casinos in Macau., The city opened to foreign firms about a decade ago and is the only place in China where casinos are legal.
The Macau government won’t issue any licenses for new U.S. companies to operate casinos there, Caesars Chief Executive Officer Gary Loveman said to investors and analysts in Las Vegas in October.
Caesars bought a golf course there in 2007, prior to the company’s 2008 buyout by Apollo Global Management LLC and TPG Capital LLP, with the intent of developing a resort on the property. The company paid $577 million for the land, the Las Vegas Review Journal reported.
The company said last month that its second-quarter net loss narrowed to $212.2 million from $241.7 million a year earlier, when it booked a $101 million impairment charge on the value of its Macau land.
Caesars said today it expects the completion of the sale to Pearl Dynasty to be completed in the fourth quarter.
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