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.