A Chinese games maker has gained exclusive rights to negotiate with Caesars Acquisition Company to buy Caesars Interactive Entertainment.
News reports say a consortium led by privately held Giant Interactive Group, a developer and operator of multiplayer games, won the sole bargaining position for CAC’s online gaming subsidiary for an unspecified period following an auction that included U.S. toys and games maker Hasbro and South Korean mobile games provider Netmarble Games.
The sale would include Playtika, which CIE purchased in 2011, but not the company’s real-money games or the World Series of Poker, which is part of Caesars Acquisition.
Even so, the outcome could see Caesars Interactive, the Caesars group’s most profitable company with 2015 revenues of $766 million, valued at more than $4.2 billion.
But it won’t be a simple process by any means.
The talks are taking place against the backdrop of a protracted restructuring of Caesars Entertainment Operating Co. under the protection of Chapter 11 of the U.S. Bankruptcy Code. CEOC, the largest casino operator in the Caesars group, entered Chapter 11 in January 2015 with $18 billion of debt. Parent Caesars Entertainment is trying to secure creditor approval for a complex plan to wipe away most of that through a combination of cash and equity in a planned real estate investment trust. A merger between Caesars Entertainment and Caesars Acquisition also is part of the plan.
The proceeds of a CIE sale would go a long way toward funding the plan, but given Caesars’ history of asset transfers CEOC’s junior creditors are expected to be wary of any deal that could endanger their ability to satisfactorily recover their investments. They have as much as $12 billion in claims against Caesars Entertainment and its private equity backers, Apollo Global Management and TPG Capital, claiming the parent company looted the group’s best assets prior to the Chapter 11 filing to shield them from its debt-saddled operating unit. Caesars has said the acquisitions were done at fair value. Still, junior creditors could try to block a CIE sale, depending on how the proceeds are distributed under a restructuring among CEOC’s bank lenders and other senior creditors.
