CAESARS WORLD BOARD APPROVES RECAPITALIZATION
Caesars World Inc <CAW> said its
directors unanimously approved a recapitalization plan under
which stockholders will get a cash distribution of 25 dlrs per
share via a one-time special cash dividend and will retain
their common stock ownership in Caesars World.
    Caesars World said it expects to raise the approximately
one billion dlrs needed to pay the 25 dlr per share dividend
and the expenses of recapitalization through around 200 mln
dlrs in bank borrowings and a public sale of approximately 800
mln dlrs of debt. Some outstanding debt will be retired.
    Drexel Burnham Lambert Inc, Caesars' financial advisor, has
told the company it is confident it can arrange the entire
financing needed for the recapitalization.
    Henry Gluck, chairman and chief executive officer of the
hotel, casino and resorts company, said in a statement the
board believes the recapitalization plan is financially
superior to a 28 dlr a share tender offer by Martin Sosnoff.
    Gluck said the Caesars World board once again recommends
that shareholders reject the Sosnoff offer.
    The stock closed at 29.25 dlrs a share on Friday.
    "Our ability to restructure along these lines is possible
primarily because of the financial stability and the strong
operating results achieved by management in recent years," Gluck
said.
    He said that after the recapitalization takes effect,
proforma net income for the fiscal year ended July 31, 1988 is
expected to be about 28.7 mln dlrs.
    Fiscal 1988 primary earnings per share are projected to be
76 cents, based on about 37.8 mln in post-recapitalization
common and common-equivalent shares outstanding.
    Commenting on the company's longer term earnings outlook,
Gluck said "we project net income to increase to 86.2 mln dlrs
in 1992, reflecting increased operating income and lower
interest expense due to the retirement of 267 mln dlrs of debt
incurred in connection with the recapitalization."
    He said the company does not usually release projections,
but has done so now beause of the significance of the
recapitalization.
    Gluck said the recapitalization plan will be submitted for
stockholder approval at a special meeting expected in June.
    The plan will require the approval of stockholders and that
of the Nevada and New Jersey gaming regulatory authorities.
    As part of the plan, the company will change its state of
incorporation from Florida to Delaware by means of a merger of
Caesars World into a wholly owned subsidiary of the company.
    The new incorporation certificate and bylaws will provide
for, among other things, a "fair price" provision requiring that
certain transactions with interested 15 pct stockholders be
approved by an 80 pct vote of stockholders, excluding shares
held by such interested stockholders.
    Caesars World said in a statement that "the cash
distribution will result in a substantial deficit in
stockholders' equity." It did not give an estimate of the size
of this deficit.
    But the company said its financial advisors have said they
believe that after the recapitalization, Caesars World should
have the financial flexibility and resources necessary to
finance its current and projected operating and capital
requirements.
 REUTER
