Return to search

Caesars agrees to restructuring deal

'The revised plan of reorganization will release all pending and potential litigation claims and causes of action against Caesars Entertainment’ according to the group.

US casino group Caesars Entertainment and its private equity backers, Apollo Global and TPG, have agreed to a reorganization plan that would enable it to pave its way out of a billion-dollar bankruptcy and avoid a costly litigation battle with its creditors.

“Confirmation of the plan would facilitate a successful conclusion to Caesars Entertainment Operating Company (CEOC's) bankruptcy proceedings in 2017 and enable Caesars Entertainment and CEOC to move forward with a substantially improved capital structure,” Caesars said in a statement.

As part of the deal, junior creditors, who recently sought information about Apollo and TPG executives’ personal financial positions, will own a larger equity holding in a new group formed through the parent company’s merger with another affiliate, Caesars Acquisition Co.

The creditors will receive 66 cents on the dollar, up from a previous offer of 39 cents, according to the statement.

The private equity firms will also hand over their entire $950m stake in the listed parent company, Caesars Entertainment Corporation, the statement said. Apollo and TPG will own a small stake of the group to be called “New CEC”.

“The revised plan of reorganization will release all pending and potential litigation claims and causes of action against Caesars Entertainment, Caesars Acquisition Company, and related third parties to the fullest extent permitted,” the statement said.

CEOC filed for bankruptcy in January 2015 amid creditor accusations that parent CEC and private equity sponsors Apollo and TPG had stripped the operating arm of its best assets, as previously reported by pfm.

In August, the judge suggested that the firms should chip in to help restructure CEOC in its Chapter 11 case. The company’s current reorganization plan includes a $4 billion payment from CEC but not from TPG or Apollo, as previously reported by sister title Private Debt Investor.

At a 16 August meeting, former mediator and federal bankruptcy judge Joseph Farnan asked whether TPG and Apollo would “fund up to $250 million to reach a ‘best and final’ deal” for a 58 percent recovery for the debtor’s second priority noteholders. CEOC’s creditors and other parties, including CEC, were party to the negotiations.