The casino and resort giant sold 1,811,313 shares of its common stock at $9.00 per share to raise gross proceeds of about $16 million before fees and discounts.  Keep in mind that this is the Harrah’s-Caesars deal which was a $15 billion buyout back at the peak of private equity.

$16 million… $15 billion… $28 billion.  Whatever it boils down to…  The figure we were counting on was up to $223.4 million in additional stock, the overwhelming majority of which would be coming from private equity owners. Apollo Global Management, LLC (NYSE: APO) is not even reacting positively to the news with a 0.8% drop down to $14.97 so far today, probably because it is not selling shares.  Paulson & Co. has the right to sell along with affiliated groups of Goldman Sachs Group Inc. (NYSE: GS).

Even a $500 million offering could have set the pace for up to a decade for all of the backers to exit their positions.

The reason that the company chose this model is likely to keep an initial higher value for a limited share float.  That establishes a fair market value that is probably higher than if the firms all sold shares in a huge offering for the market to absorb.  It allows private equity firms to liquidate in batches and it also gives those private equity firms an ability to peg a true market value to the shares rather than a theoretical value of the shares based solely upon other casino stock values.

Our take: The private equity firms should dismantled the assets into separate companies and sold them off or brought them public as smaller casino properties.

In some manner of speaking, this is far less transparent than exactly the ‘unlocking of Singapore and Macau’ values from Wynn Resorts, Limited (NASDAQ: WYNN) and Las Vegas Sands Corporation (NYSE: LVS).

Does us calling it a sham of an IPO mean that it will flop?  Not at all.  As we are publishing this, the value is up 50% from the $9.00 pricing at $13.70 on almost 3.9 million shares.  With such a low float, who knows how high it could go.  Still, if you are a ‘widows and orphans’ investor you probably better look elsewhere.

At least this IPO did not launch on the Ides of March.

JON C. OGG

A fresh filing is one that frankly shows desparation or the agony of defeat.  The combined outfits are worth billions of dollars.  While the total to be sold by Caesars Entertainment Corporation on a continuous basis is listed as being $500 million, the company noted, ” We are selling an aggregate of 1,811,313 shares in this offering. The initial public offering price of our common stock is expected to be between $8.00 and $10.00 per share.”

Wait one second here.  That is about $18.1 million in gross proceeds.  If you look back at the Top IPOs to watch you will be mystified.  The stock will trade on the Nasdaq Global Select Market under the symbol “CZR.”

Caesars has the following underwriters: Credit Suisse; Citigroup; BofA Merrill Lynch; Deutsche Bank Securities; KeyBanc Capital Markets; Lebenthal & Co.; and Ramirez & Co. The underwriters will have a 30-day option to purchase up to 271,697 additional shares from the company at the initial public offering price less underwriting discounts and commissions.

In the amended prospectus, the company does note that the selling shareholders may sell up to $223.4 million in common stock in the offering.  The problem is that the prospectus does not read in the normal way of other prospectus filings. The private equity firms are currently a wild card when it comes to how much may be sold.  Why the private equity owners have not broken Caesars up into bits and pieces is a mystery.  The Harrah’s acquisition is now part of the Caesars group and here is the description (as of September 30, 2011):

owned, operated or managed 52 casinos in 12 U.S. states and seven countries primarily under the Caesars, Harrah’s and Horseshoe brand names and the facilities had an aggregate of approximately three million square feet of gaming space and approximately 42,000 hotel rooms; its Total Rewards customer loyalty program had over 40 million members.

If the private equity companies were to somehow get the maximum sale off of $500 million, it could take a decade or more to exit. Maybe our idea is a silly one.  Maybe this is the private equity value game at work where the private equity firms can use the public market value of a small float for the entire organization without unloading it.  What are the odds?

FULL SEC FILING

JON C. OGG

Recently public gamemaker Zynga Inc. (NASDAQ: ZNGA) could reap the benefits of more interest in games, especially casino games, on Facebook. IGT is paying about $100 for each of Double Down’s approximately 5 million players. Zynga claims 30 million players for its online poker game. That’s about half Znyga’s current market cap.

IGT’s shares are down about -2% at noon today at $17.40, in a 52-week range of $13.38-$;19.15. Znyga’s shares are up about 2% at $8.62, in a range of $7.97-$11.50. Zynga’s shares went public at $10, so the company still qualifies as a busted IPO.

Paul Ausick

Facebook and its $100 billion valuation, although by far the largest on our list, is just one of many IPO potentials which will be in high demand. A new stock exchange, a host of online media outfits, a giant casino, big name retail, and private equity are all trying trying to have successful IPOs in 2012. You do not have to be an approved Second Market account holder or a venture capitalist to have a stake. Investors in 2012 can invest through business development outfits like GSV Capital Corporation (NASDAQ: GSVC), which owns shares of Facebook and Twitter, and Keating Capital, Inc. (NASDAQ: KIPO). These pre-IPO funds were not available ahead of many of the top 2011 IPOs. There is even the First Trust US IPO Index (NYSE: FPX) fund for investors looking at other investment strategies around IPO investing.

But other than those listed here, there are many other potential IPO candidates waiting in the wings. Among the private equity’s past giant leveraged buyouts are Univision and Clear Channel in media and TXU in power and electricity, which could all be potential IPO candidates if and when the market will accommodate them. Also, such companies as the fashion-deal site called Gilte Groupe, the “Angry Birds” video game maker Rovio, and others are also waiting in the wings with possible IPOs.

24/7 Wall St. has compiled a detailed review of each of the expected top IPOs for 2012. We have included details on the finances, backers, related entities, financial terms, the size of the IPO, and even the underwriting groups.

1.  BATS Global Markets, which was founded in 2005, first filed to become a public company in May of 2011. The company, which started as an alternative to the NYSE for equities trading in Europe and the U.S. is now the third largest equity exchange in America and operates the second largest pan-European multilateral trading facility. As such, this IPO is is a key one for investors of exchanges and trading platforms. BATS plans to raise up to $100 million through the offering. More than 90% of the company’s revenues come from trading U.S. equities. These days it is also a primary listing venue, meaning it can conduct IPOs. The global operator of stock and options markets plans to list its shares on its own exchange rather than the NYSE under the ticker BATS. The offering will have a dual-class share structure and the bankers are listed as Morgan Stanley, Citigroup, and Credit Suisse.

2.  Caesars Entertainment Corporation filed for its IPO in late 2011. This IPO is a holdover from the private equity buyout days when the company tried to go public but later retracted the offering. No exchange was specified nor was a ticker set in the filing. As of September 30, 2011, the company owned or operated 52 casinos in a dozen U.S. states and seven countries under the brand names of Caesars, Harrah’s and Horseshoe with a total gaming space of 3 million square feet and about 42,000 hotel rooms. Caesars Entertainment is what’s left of the massive $9.3 billion buyout by Apollo Global Management, LLC (NYSE: APO) and TPG in 2005. Sales in the first nine months of 2011 were more than $6.6 billion and operating income was was over $600 million, with a net loss after items of $467 million. Private equities and casino operators are paying close attention to this IPO. If the real size of the overall company is too large, perhaps the private equity firms may consider breaking the underlying companies up into separate offerings and utilize a ‘keiretsu’ approach under a network of companies.

Read Also: DJIA 2012 Gain of 12% Projected

3.  The Carlyle Group, L.P. filed to raise up to $100 million in securities in September 2011. As one of the best known names in the world of private equity IPO be one to watch, for investors and other private equity companies. No ticker and no exchange were designated in the filing, but the company named J.P. Morgan, Citi, and Credit Suisse as the lead underwriters. With more than $150 billion in assets under management, this private equity giant is a key player in real assets, global market strategies, and now also in funds of funds after buying a 60% equity interest in AlpInvest. With several private equity companies already publicly traded, Carlyle has been an IPO candidate group for years.

The company noted that this is a newly-created role.  She will oversee corporate finance, investor relations, accounting, corporate development, human resources and real estate.  She previously served as CFO of Art Technology Group (ATG) and she oversaw the acquisition of the company by Oracle Corporation (NASDAQ: ORCL); and she was also vice president of finance at Akamai Technologies Inc. (NASDAQ: AKAM) and she also worked at Deloitte. Bradley is a Certified Public Accountant and holds a BA in Economics from Wheaton College.

TripAdvisor claims to be the world’s largest travel site which attracts more than 65 million unique monthly visitors over its 19 popular travel brands. The company also noted that its branded sites make up the largest travel community in the world with more than 50 million unique monthly visitors, 20 million members, and over 50 million reviews and opinions.

If you break out the TripAdvisor Media Group revenues in 2010, that came to about $486 million versus the total revenues of nearly $3.35 billion for the larger Expedia.

How the breakout comes on earnings will be reviewed closer to the TripAdvisor IPO.  On a revenue basis alone, TripAdvisor would account for nearly 15% of the Expedia revenue.

JON C. OGG

The Macau casino has already migrated from the development stage to the revenue stage of its business, and shareholders are getting more and more used to the company reporting positive earnings each quarter.

Melco Crown’s revenue in the second quarter of 2011 was $960.0 million, up 67% from a year earlier.  The company even reported positive earnings on GAAP basis of $0.13 EPS (or $66.7 million) versus a loss of -$0.06 EPS (or -$30.1 million) a year ago.

Here is what is driving the gains… “improved rolling chip volumes, normalized rolling chip win rates at City of Dreams, continued strong growth in mass market and hotel operations at City of Dreams, as well as contributions from other non-gaming amenities such as The House of Dancing Water and Club Cubic.”

What is interesting about Melco is that its $6+ billion value makes it far smaller than Macau (and Vegas) rivals Las Vegas Sands (NYSE: LVS) for its Sands China and Wynn Resorts Ltd. (NASDAQ: WYNN) for its Wynn Macau.  Analysts spent much of July chasing the shares higher and higher with price targets and the $15.55 consensus price target from Thomson Reuters is actually low considering the upgrade cycle seen in the last six-weeks.  Shares peaked at $16.15 this year and now the stock is back to $12.10 after a 3.5% gain today.

Another interesting development is that Melco Crown applied for a dual-listing with the Hong Kong stock over the last month.

Melco Crown operates three casino projects in Macau and it recently completed the acquisition of a 60% interest in the Studio City project on Cotai, which is aimed to expand its current portfolio of gaming assets in Macau.

So, the big question is how the analysts will treat Melco CRown in the coming days.  They were stepping all over each other to raise their targets earlier this summer.  The stock slid almost 20% before earnings in just the last few days, mostly due to fears that Asian businessmen would crimp their gambling budgets as times get a little less fruitful.

Our take is that no one is immune, but our take is also that Macau still has ample room for growth.  Macau has come along way from what was left over of the Portuguese colony.  Investors are looking for “haven investments” that offer either growth or income (or both).

It is too soon to ask for Melco Crown to pay a dividend and casinos have historically not been big dividend outlets for investors.  Still, Macau has enough room for growth ahead of it that this may still represent a haven for investors.

JON C. OGG

The big winner from “The Munchies” of course would be Pepsico, Inc. (NYSE: PEP) as it owns Frito-Lay, Ruffles, Doritos, Cheetos, and more. Calls to Frank and Paul’s staff were not returned.   How many presidential candidates have co-authored legislation that would effectively legalize pot?

• Here are the states which profit the most from taxing sin (and selling it).
• Also, there was earlier a move for a marijuana technology company for an IPO, although we have not followed this closely of late and that news may have dated by now.
• Also, keep in mind that PROP 19 failed.

The new broad laws covering financial regulation usually fall under the umbrella of what is called “Dodd-Frank” by the public, but this is formally named Dodd–Frank Wall Street Reform and Consumer Protection Act.  If this does actually make it to law rather than just legislation, it would seem that the bill might be called “Pot-Frank.”

JON C. OGG

Standard & Poor’s has now raised the corporate credit rating of Las Vegas Sands Corporation (NYSE: LVS) to “BB” from “BB-” and it has given it a stable outlook after the company’s plans to refinance its existing Macau credit facilities with up to $4.5 billion in new credit facilities.  The upgrade noted strong performance and a ‘meaningful cushion to a leverage threshold’ for a “BB” rating.

The Macau refinancing will add about $1.1 billion of additional debt that will be to pre-fund the Macau development.  What S&P sees is that Las Vegas Sands is expected to grow its EBITDA by 30% in 2011 from 2010 and that is expected to reduce its lease-adjusted leverage in turn.

The upgrade in Wynn Resorts Ltd. (NASDAQ: WYNN) just last week from S&P took its corporate credit rating to “BB+” from “BB” and with a “Positive” rating outlook.  The difference here is that Wynn is one notch (and perhaps one or two steps) ahead of Las Vegas Sands in gaining an “investment grade” from S&P.  During the recession, casinos were all either at-risk or in serious trouble.  What a difference a couple of years can make.  One of the positives noted in S&P’s upgrade of Wynn was its funding plan for its planned Cotai, Macau resort.

Macau, Macau, Macau… The underlying trend and benefits leading to these credit rating upgrades by S&P.  No wonder we are seeing analyst after analyst raise their price targets on Melco Crown Entertainment Ltd. (NASDAQ: MPEL).  Effectively, it is the Macau pure-play. At $11.21, Melco Crown’s 52-week trading range is $3.56 to $12.06 and its market cap is nearly $6 billion.  What matters for Melco Crown is that it is no longer in its speculative and development stage.  Not only is it generating revenues now, it is now running profitably.

Casinos traditionally have relied heavily on borrowing.  They used to all be in junk bonds and in credit facilities that were at much higher rates.  That was then, the zero interest rate environment is now.  Borrowing costs are going to be lower for Las Vegas Sands and for Wynn as a result, now we have to see if peers will get a related look as well.

Again, these are corporate credit rating moves rather than stock analysis moves.  Wynn trades around $132.00 today and its 52-week range is $73.12 to $151.73. Las Vegas Sands is up marginally after the upgrade at $39.75 and its 52-week trading range is $20.73 to $55.47.

Sheldon Adelson must be a far more happy man than he was during the peak of the recession and during the peak of the credit crisis. Ditto for Steve Wynn.

JON C. OGG

Wynn shares hit a new multi-year high on Wednesday after its solid earnings and after doubling its dividend.  The payout went to $0.50 from $0.25.  Estimates for 2011 are $3.24 EPS from Thomson Reuters.  If that higher payout can be sustained, something which may be economically sensitive, that comes to $2.00 per year or about 1.3% in dividend yields.

The higher dividend appears to be supported by its growth in Macau and a normalization of the Las Vegas operations.  The yield of 0.65% today and the new yield of about 1.3% ahead is above most casino operations.  In the $1 billion casino-class of hotel-casino adult theme park stocks, only Ameristar Casinos Inc. (NASDAQ: ASCA) has a higher dividend yield.  Its $0.105 payout per quarter generates close to a 2.2% dividend yield.

Las Vegas Sands Corp. (NYSE: LVS) has not paid a dividend and it would seem like a real payout might be a ways off from today when you consider that it nearly imploded during the recession.  Sheldon Adelson may want to continue to bolster the books before deciding to go with anything close to what Wynn or Ameristar pays to holders.

MGM Resorts International (NYSE: MGM) has not had any real payouts and it too was close to being deemed “at-risk” during the peak selling in early 2009 during the recession.

Melco Crown Entertainment Ltd. (NASDAQ: MPEL) is probably the least likely of all for some time to have a consistently high payout.  Its operations are still too new and 2011 is the first real year of earnings expected.

Getting excited about a 1.3% dividend yield from Wynn probably doesn’t sound like too much. This is still the highest payout of its class and most competitors do not pay out anything to their holders.

JON C. OGG

If there was one man who could have pulled off the buyout it was Kirk Kerkorian. Kerkorian has been the largest holder of MGM. Now he is leaving the board of directors and will just become an advisor as Director Emeritus.  He will be able to attend board meetings but will not have a board vote.

Kerkorian led the charge in the last decade or so with the acquisition of Mirage Resorts and then again when the then MGM MIRAGE merged with Mandalay Resort Group. This monster project of the City Center was almost more elephant than the lions could chew.  MGM has also just effectively taken control of their Macau operations after reaching a deal with Pansy Ho ahead of its IPO.

It was always a possibility that Kerkorian would take MGM private, but sales and age have taken that thought farther and farther away.  What is amazing is that Kerkorian is 93 years old and his Tracinda entity still owns about 27% of MGM.

It looks like Wall Street doesn’t care.  MGM shares are up 1.4% at $13.90 today and trading volume is not off the charts.

JON C. OGG