Harrahs Entertainment has reached an accord with its insolvent subsidiary, Caesars Entertainment Operating Company (CEOC), to revamp a substantial $5 billion portion of debt. This pact signifies a crucial move toward settling the financial turbulence that has troubled the gaming behemoth for a considerable period.
CEOC declared bankruptcy in January 2015, burdened by an $18 billion debt burden. To address this, Caesars Entertainment and its acquisition division had been endeavoring to revise their merger contract since July 2016.
The primary obstacle in this situation was a disagreement between CEOC’s lenders and its private equity investors, Apollo Global Management and TPG Capital Management. Allegations arose that these entities had stripped CEOC of its valuable holdings, leaving it in dire straits.
Matters escalated in August when the possibility of a legal injunction became imminent. To avert this, Apollo and TPG consented to substantially diminish their ownership interest in Caesars from a dominant 66% to a mere 16%.
This revised restructuring scheme paves the path for creditors to assume control, possessing a 70% share in the reorganized Caesars. Apollo and TPG, while maintaining a minority position, will be liberated from the legal disputes that have plagued them.
The New York Times indicates that this arrangement is advantageous for junior bondholders, who are now poised to obtain a combination of cash, equity, and convertible securities. This package is estimated to be worth 66 cents on the dollar, a considerable increase from Caesars’ prior proposition.
Exhibited satisfaction with the advancements achieved and aspire to witness a swift resolution to this matter, despite recognizing that challenges remain,” conveyed Bruce Bennett, the legal representative for the consortium of subordinate debt holders.