LAS VEGAS (AP) -- Caesars Entertainment Corp. said Tuesday that it plans to form a new company, with private equity firms Apollo Management LP and TPG Capital LP investing up to $500 million in the growth-oriented business.
The debt-heavy casino operator said the move is intended to improve its capital structure and create a company with the flexibility to pursue new projects.
Caesars, based in Las Vegas, runs casinos under the Caesars, Harrah's, and Horseshoe names. It has faced falling revenue at its casinos due to weaker demand in the U.S. and the impact of Superstorm Sandy on its Atlantic City properties last fall.
The company also does not have the presence in the Chinese gambling enclave of Macau that has helped other U.S. casino operators to offset weakness in their U.S. operations.
Caesars said Tuesday that it will retain majority ownership of the new company, Caesars Growth Partners LLC. The new entity will take over the company's online business, Caesars Interactive Entertainment and its Planet Hollywood Resort & Casino in Las Vegas, among other assets.
The company will offer shareholders the right to buy a stake in the new company and expects it could receive up to $1.2 billion from existing shareholders. While the company says the two private equity firms plan to invest up to $250 million each, for a total of $500 million, they have not yet signed an agreement to do that.
Shares of Caesars soared $3.41, or 27.3 percent, to close at $15.90. The stock has traded between $4.52 and $18.37 over the past 52 weeks.