Caesars agrees debt restructuring deal

ars Entertainment has taken a significant step towards appeasing its creditors, announcing that it has reached a $5bn settlement with the majority of those owed by its bankrupt operating unit, Caesars Entertainment Operating Company Inc (CEOC).

CEOC filed for bankruptcy with debts of $18bn in January 2015, with Caesars Entertainment Corporation and Caesars Acquisition Company amending the terms of their proposed merger in July 2016 in order to repay the operating unit’s creditors.

The latest development centres on the dispute between CEOC’s creditors and the firm’s private equity backers Apollo Global Management and TPG Capital Management, who have been accused of asset-stripping the company.

Apollo and TPG have agreed to diminish their company equity in Caesars from 66% to 16%, avoiding a difficult set of legal circumstances given US Bankruptcy Court Judge Benjamin Goldgar’s decision in August not to extend an injunction preventing lawsuits against Caesars over terminated bond guarantees.

New bankruptcy terms will see creditors own 70% of the reorganised Caesars, with Apollo and TPG retaining a limited stake and no longer set to face legal action.

The Financial Times has reported that junior bondholders will now receive cash, equity and convertible bonds worth 66 cents on the dollar, 27 cents higher than Caesars’ previous proposal.

Bruce Bennett, the lawyer representing the official committee of junior bondholders, said: “While we recognise that a lot of work remains to be done, we’re pleased with where we are and the progress that has been made and we’re looking forward to concluding the case.”