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3 年前
UPDATE 2-Caesars gets creditor support for debt overhaul, but hurdles remain
2015年1月9日 / 下午3点28分 / 3 年前

UPDATE 2-Caesars gets creditor support for debt overhaul, but hurdles remain

(Adds comment from credit analyst, updates share price)

By Tom Hals

Jan 9 (Reuters) - Caesars Entertainment Corp said on Friday it has garnered enough support from key creditors to carry out its $18.4 billion debt restructuring plan for its operating unit, which will soon file for bankruptcy.

Under the plan, the operating unit will file for bankruptcy by Jan. 20 and be split into two companies, one that runs 44 casinos in 13 states and a property company.

The plan will reduce the debt associated with Caesars Entertainment Operating Co Inc to $8.6 billion from $18.4 billion.

The casino operator has struggled for years, particularly outside Las Vegas, as gaming options have proliferated in the United States. Caesars has been weighed down with debt from a $29 billion leveraged buyout of what was then known as Harrah's Entertainment Corp in 2008 by TPG Capital and Apollo Global Management.

Chris Snow, an analyst with CreditSights, said a lot of the value created from the deal hangs on the successful transfer of the operating unit's property to a newly established real estate investment trust, or REIT. That deal will have to be reviewed by tax authorities.

"It's a very complicated process," he said.

Casino companies Penn National Gaming and Pinnacle Entertainment Corp have recently pursued REIT conversion plans as a way to create value.

Two-thirds support from first-lien noteholders gives Caesars the required backing to enforce its bankruptcy plan on those creditors who oppose it. However, it still must prove the plan is fair, which could prompt a fight, given that the junior creditors are likely to get next to nothing while shareholders would benefit.

"I don't think we've seen the fireworks in this one yet," said David Tawil, president of Maglan Capital, a hedge fund that invests in corporate restructurings.

The agreement with first-lien noteholders follows months of talks and corporate reshuffling, and junior creditors who are owed more than $5 billion have sued. Those creditors allege that choice assets were put beyond their reach for the benefit of the parent company shareholders and the company's private equity backers.

While the bankruptcy will stay lawsuits against the operating unit, the junior creditors will try to make their case in bankruptcy court.

Attorneys for the junior creditors did not immediately respond to a request for comment.

Shares of Caesars Entertainment were down 2.3 percent at $13.76 in mid-day Nasdaq trading on Friday in a weaker overall market. The stock is above lows hit in October of around $8.51. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Jeffrey Benkoe and Dan Grebler)

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