Caesars Entertainment Operating Company has enough approvals from lenders to exit Chapter 11 protection early next year, according to parent company Caesars Entertainment, which said more than 90 percent of CEOC’s 173 voting creditors have cast ballots in favor of a plan to restructure the company and slash its debt by more than half.
The voting was confirmed by U.S. Bankruptcy Court for the Northern District of Illinois, which is overseeing the restructuring of Caesars’ largest casino subsidiary.
If approved, the plan will erase around $10 billion of CEOC’s $18 billion of debt by compensating creditors with $5 billion in cash and majority ownership of a new real estate investment trust that will lease the group’s casinos and hotels to a separate management company. Creditors also will receive stock in a new Caesars Entertainment created through a merger with its Caesars Acquisition Co. subsidiary.
Some obstacles remain, however.
For one, Caesars has yet to raise some $3.8 billion needed to finance the CEOC restructuring. Also, the federal trustee monitoring the case has filed objections to provisions of the plan that grant Caesars’ private equity owners, Apollo Capital Management and TPG Capital, blanket immunity from claims by creditors that CEOC was deliberately stripped of its most profitable assets prior to filing for Chapter 11 protection in January 2015.
There is also a dispute to be resolved with a group of bank lenders over the terms of their recovery. The group, whose members hold some of the most senior CEOC debt and were among the first to support the reorganization, say they’re waiting for documentation that ensures the market value of the non-cash consideration they’re due to receive under the plan.
“Simply put, without the consent of the bank lenders, the plan completely unravels,” they said in a November 21 filing with the court.
