Therefore, this solid level of excess FCF will enable the company to either improve the leverage profile at PropCo, or upstream cash to CZR, which could be used to support the CEOC credit or invest in growth opportunities.
The company indicated that it planned to use IPO proceeds on four projects, which require roughly $500 million of investment from CZR.
As a result, Fitch equalizes the IDRs of CZR and CEOC.
Tickers featured: AGI, AHT, ASCA, BYD, CZR
, ESA, FS, GTK, HET, HLT, HMT, HOT, IGT, IHR, LHO, MAR, MBG, MGAM, MGG, ORBZ, STN, WMS, WYNN.
Tickers featured: AKLM, ATAR, ATVI, CZR
, DDE, DVD, EIDSY, ERTS, MWY, NOK, PSP, SNE, THQI, TTWO, WMS.
The rating action follows completion of Harrah's acquisition of CZR on June 13, 2005.
With closing of the CZR acquisition, CZR has been merged into HOC, a wholly owned operating subsidiary of HET, where virtually all the debt and assets reside.
In addition, HET should be able to improve same store sales and efficiency at CZR properties by implementing its industry-leading player tracking systems and loyalty programs.
Harrah's will initially finance the cash portion of the CZR acquisition ($1.
However, an anticipated drop-off in spending 2006 and a full-year of CZR results should produce ample free cash flow for the company to delever to levels appropriate for the rating (below 4.
EBITDA margins improved 150 bps, excluding a $4 million expense related to the CZR acquisition.