Caesars secures restructuring support from all major creditor groups

By Caroline Salls

Pittsburgh, Oct. 5 – Caesars Entertainment Corp. and Caesars Entertainment Operating Co., Inc. (CEOC) entered into or amended and restated restructuring support agreements with the representatives of all of CEOC’s major creditor groups and agreed to the terms of a third amended joint plan of reorganization, according to a news release.

Caesars said the agreements represent a key milestone in the companies’ effort to implement a consensual restructuring for the CEOC debtors and pave the way toward a confirmable plan and a successful conclusion to CEOC’s bankruptcy proceedings in 2017.

The restructuring support agreements with the first-lien bank lenders, first-lien noteholders, second-lien noteholders and holders of subsidiary guarantee notes are effective immediately.

Caesars said the key economic terms of the support agreements are substantially similar to the company’s previously announced term sheet.

According to a third amended plan filed with the U.S. Bankruptcy Court for the Northern District of Illinois, instead of the previously expected distribution of cash proceeds from the sale of new Caesars common equity, the plan now calls for the distribution of equity buyback proceeds from an escrow account.

The third amended plan also eliminates a contribution by Caesars of a portion of an unsecured creditor cash pool and any cash to be paid under an additional bank or bond consideration. Caesars will still make a new cash contribution on the plan effective date, which will be used by the CEOC debtors to fund general corporate purposes, restructuring transactions and plan distributions.

Also on the plan effective date, New Caesars will use at least $1 billion of Caesars Interactive equity buyback proceeds to purchase new common stock in accordance with common equity cash election procedures.

The agreements are subject to termination if a guarantee-litigation injunction against Caesars Entertainment is no longer in place and if the CEOC plan does not take effect before a specified date in 2017. In addition, the agreement with the first-lien noteholders will terminate automatically on Oct. 14, unless, before that date, the parties have reached an agreement on additional documentation in connection with the CEOC plan.

In addition, Caesars said the guaranty litigation pending against it was stayed on Wednesday through the earliest of the first omnibus hearing after the court confirms or denies approval of the CEOC plan, the termination of the second-lien support agreement and a further court order.

Caesars is a Las Vegas-based casino-entertainment company that filed for bankruptcy on Jan. 15, 2015. The Chapter 11 case number is 15-01145.

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