Oaktree Capital, a major creditor for Caesars Entertainment, is keeping an eye on Congress to make sure that the two private equity companies that own Caesars—Apollo Global Management LLC and TPG Capital Management—don’t make a deal to slip provisions into a bill that would allow the company to emerge from bankruptcy on the cheap.
“We understand that Caesars and its sponsors are now again asking Congress to approve the provision,” Oaktree Vice Chairman John Frank wrote in a May 18 letter to House Speaker Paul Ryan and Minority Leader Nancy Pelosi. Frank said that since no bill has been introduced to address this specifically, “we are left to assume its supporters hope, once again, to add the rider to a ‘must-pass’ bill,” he wrote.
The measure would allow Caesars to skirt the Trust Indenture Act, a Depression-era law meant to protect the rights of bond investors. A recent court decision upheld the bill, and Oaktree contends that the provision Caesars wants that diminishes the power of bondholders in restructuring negotiations. Nevada senator and former Majority Leader Harry Reid had previously tried to assist Caesars in a similar provision.
Caesars, meanwhile, says that Oaktree wants it both ways, saying one thing to Congress and another in court filings. But it’s not just Caesars that would be involved, it has implications across the $225 billion distressed debt market.
Oaktree is just one of several hedge funds and asset managers that have sued Caesars and its owners over how the company restructured prior to declaring bankruptcy in its operating unit. Creditors have filed suit to put the parent company in bankruptcy before any restructuring is completed.
Meanwhile, union employees of Caesars Entertainment Corporation held a “national day of action” in six cities across the country to challenge executive bonuses of nearly $50 million in 2016, a year in which the operator is struggling to avoid Chapter 11 and working to restructure the debt in the bankruptcy case of its largest operating unit.
The employees, members of the UNITE HERE union, also are protesting payments made to Caesars’ owners, private equity companies Apollo Global Management and TPG Capital.
According to UNITE HERE, the workers demanded to meet with property-level executives to criticize executive bonuses. Additionally, in Las Vegas at the company’s annual shareholder meeting, culinary union members challenged the company’s plans.
“Top-rate workers have gotten 80 cents in raises over the last 12 years, and you haven’t even met with us yet,” said Dan Lynch, a bartender at Harrah’s Resort Atlantic City, quoted in a press release from the union. “Are executive bonuses more important to Caesars than the workers that make the beds and pour the drinks?”
In addition to bonuses, UNITE HERE challenged the company on the $59 million that Caesars paid to Apollo and TPG and their affiliates. Maya Holmes, a UNITE HERE researcher, asked, “$20 million of that were expense reimbursements to Apollo and TPG for ‘financial and strategic advisory services and consulting services.’ What kind of advice did the company get for that $20 million?”
Leain Vashon, a bell captain at Paris Las Vegas, said, “When Caesars wants to give almost $50 million in bonuses this year to a small group of mostly executives and offers much less to thousands of its workers, we question what you really value.”
Workers from Las Vegas, Atlantic City, Biloxi, Tunica, Baltimore and Southern Indiana protested the proposed bonuses by sending delegations to Caesars management.
UNITE HERE is currently negotiating contracts or wage re-openers for approximately 15,000 Caesars workers.
