Liquidity Considerations

We are a highly-leveraged company and had $7.2 billion in face value of debt outstanding as of March 31, 2015, subsequent to the deconsolidation of CEOC effective January 15, 2015. As a result, a significant portion of our liquidity needs are for debt service, including significant interest payments. Our estimated consolidated debt service obligation for the remainder of 2015 is $551 million, consisting of $46 million in principal maturities and $505 million in required interest payments. Our estimated consolidated debt service obligation for 2016 is $642 million, consisting of $62 million in principal maturities and $580 million in required interest payments.

CEC is primarily a holding company with no independent operations, employees, or material debt issuances of its own. CEC has ownership interests in CEOC, CERP and CGP LLC; however, CEC’s relationship with its main operating subsidiaries does not allow for the subsidiaries to provide dividends to CEC nor does CEC have a requirement to fund its subsidiaries’ operations.

Cash and Available Revolver Capacity

	March 31, 2015
(In millions)	CERP			CES		CGP LLC		Parent
Cash and cash equivalents	$	212		$	90	$	845	$	408
Revolver capacity	270			—		160		—
Revolver capacity drawn or committed to letters of credit	(145		)	—		—		—
Total	$	337		$	90	$	1,005	$	408

Future Maturities of Long-Term Debt

(In millions)	2015		2016		2017		2018		2019		Thereafter		Total
CERP	$	29	$	36	$	26	$	170	$	25	$	4,501	$	4,787
CGP LLC	17		26		23		38		192		2,086		2,382
Total	$	46	$	62	$	49	$	208	$	217	$	6,587	$	7,169

Future Estimated Interest Payments

(In millions)	2015		2016		2017		2018		2019		Thereafter		Total
CERP	$	349	$	394	$	405	$	410	$	403	$	489	$	2,450
CGP LLC	156		186		193		197		197		322		1,251
Total	$	505	$	580	$	598	$	607	$	600	$	811	$	3,701

See Note 12, “Debt,” for details of our debt outstanding and related restrictive covenants, including the restrictions on our subsidiaries to pay dividends to CEC or otherwise transfer cash to CEC. This detail includes, among other information, a table presenting details of our individual borrowings outstanding as of March 31, 2015 and December 31, 2014, as well as discussion of recent changes in our debt outstanding, and changes in the terms of existing debt subsequent to March 31, 2015.

CEOC Financial Restructuring Plan

As described in Note 4, a result of CEOC’s highly-leveraged capital structure and the general decline in its gaming results since 2007, on January 15, 2015, CEOC voluntarily filed for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois in Chicago (the “Bankruptcy Court”). Because CEOC is under the control of the Bankruptcy Court, CEC deconsolidated this subsidiary effective January 15, 2015. However, we expect this financial restructuring plan ultimately will reduce CEOC’s long-term debt and related interest payments. See Note 4 for details of CEOC’s Chapter 11 cases and CEOC liquidity considerations.

CERP Liquidity Discussion and Analysis

As of March 31, 2015, CERP’s cash and cash equivalents totaled $212 million. Its operating cash inflows are typically used for operating expenses, debt service costs and working capital needs. CERP is highly leveraged and a significant portion of its liquidity needs are for debt service. As of March 31, 2015, CERP had $4.8 billion face value of indebtedness outstanding including capital lease indebtedness. See Note 12 for additional information related to CERP indebtedness and related restrictive covenants. Cash paid for interest for the three months ended March 31, 2015 was $48 million.

CERP’s ability to fund its operations, pay its debt obligations, and fund planned capital expenditures depends, in part, upon economic and other factors that are beyond its control, and disruptions in capital markets and restrictive covenants related to its existing debt could impact CERP’s ability to secure additional funds through financing activities. We believe that CERP’s cash and cash equivalents balance, its cash flows from operations, and/or financing available under its revolving credit facility will be sufficient to meet normal operating requirements, to fund planned capital expenditures, and to fund debt service during the next 12 months and the foreseeable future.

CGP LLC Liquidity Discussion and Analysis

CGP LLC’s primary sources of liquidity include currently available cash and cash equivalents, cash flows generated from its operations and borrowings under the CGPH Term Loan (see Note 12). CGP LLC’s cash and cash equivalents, excluding restricted cash, totaled $845 million as of March 31, 2015, and includes $34 million held by foreign subsidiaries.

Long-term obligations are expected to be paid through operating cash flows, refinancing of existing debt or the issuance of new debt, or, if necessary, additional investments from its equity holders. CGP LLC’s operating cash inflows are used for operating expenses, debt service costs, working capital needs, and capital expenditures in the normal course of business. CGP LLC’s ability to refinance debt will depend upon numerous factors such as market conditions, CGP LLC’s financial performance, and the limitations applicable to such transactions under CGP LLC’s and its subsidiaries’ financing documents. Additionally, CGP LLC’s ability to fund operations, pay debt obligations, and fund planned capital expenditures depends, in part, upon economic and other factors that are beyond CGP LLC’s control, and disruptions in capital markets and restrictive covenants related to CGP LLC’s existing debt could impact CGP LLC’s ability to fund liquidity needs, pay indebtedness and secure additional funds through financing activities.

We believe that CGP LLC’s cash and cash equivalents balance, its cash flows from operations, and/or financing available under its revolving credit facility will be sufficient to meet normal operating requirements, to fund planned capital expenditures, and to fund debt service during the next 12 months and the foreseeable future.

Consolidated Liquidity Discussion and Analysis

Consolidated cash and cash equivalents, excluding restricted cash, totaled $1.6 billion as of March 31, 2015. Cash and cash equivalents as of March 31, 2015, includes $845 million held by CGP LLC, which is not available for our use to fund operations or satisfy our obligations unrelated to CGP LLC.

In addition to cash flows from operations, available sources of cash include amounts available under our current revolving credit facilities. CERP’s revolving credit facility provides for up to $270 million, of which $125 million remained as available borrowing capacity for CERP as of March 31, 2015. CGP LLC’s total revolving credit facilities provide for up to $160 million, and an immaterial amount was committed for outstanding letters of credit as of March 31, 2015.

We experienced negative consolidated operating cash flows of $102 million for the three months ended March 31, 2015, which includes negative operating cash flows of $220 million from CEOC before its deconsolidation effective January 15, 2015.

As previously noted, CEOC did not expect that its cash flows from operations would be sufficient to repay its indebtedness, and as a result, filed for reorganization under Chapter 11 of the Bankruptcy Code. Because of the absence of cross-default provisions in the indebtedness issued by other CEC subsidiaries and the modification of the parent guarantee (as discussed in Note 11, “Contractual Commitments and Contingent Liabilities”), we do not believe that the impact of the event of default by CEOC, resulting from its bankruptcy filing, will materially impact the liquidity of CEC and its consolidated subsidiaries as of March 31, 2015.

As described in Note 2, “Basis of Presentation and Consolidation,” CEOC, CERP, and CGPH entered into a services joint venture, CES. Effective October 1, 2014, substantially all our properties are managed by CES (and the remaining properties will be transitioned upon regulatory approval). Under the terms of the joint venture and the Omnibus License and Enterprise Services Agreement, we believe that CEC and its operating subsidiaries will continue to have access to the services historically provided to us by CEOC and its employees, its trademarks, and its programs despite the CEOC bankruptcy filing.

As described in “Going Concern” in Note 1, “Organization,” due to the material uncertainty related to the litigation described more fully in Note 5 under the heading “Noteholder Disputes,” given the inherent uncertainty of litigation, combined with the fact that the matters are each in their very preliminary stages and discovery has not yet progressed in any of them, we have concluded that we cannot provide assurance as to the outcome of these matters or of the range of potential losses should the matters ultimately be resolved against us. Should these matters ultimately be resolved through litigation outside of the CEOC Financial Restructuring, and were a court to find in favor of the claimants in any of these Noteholder Disputes, such determination could have a material adverse effect on our business, financial condition, results of operations, and cash flows. Accordingly, we have concluded that the material uncertainty related to outcome of these matters, raises substantial doubt about the Company’s ability to continue as a going concern.