First Are Foremost With Caesars’ Reorganization

Caesars Entertainment Corp. will begin talks with bank creditors on restructuring more of the operator’s $24.2 billion in debt, but analysts say bankruptcy may still be necessary. The holders of first-lien notes are reportedly getting the most attention.

Caesars Entertainment Corporation, in its ongoing effort to restructure a massive .2 billion debt load, announced last week it will begin talks with bank creditors to restructure another chunk of that debt.

The move, which follows talks with senior bondholders to restructure the largest portion of the debt—$18.3 billion in first-lien notes—was viewed positively by investors, who bumped the operator’s stock price up 12.7 percent to close at $11.71.

“This latest and important step further reflects our commitment to working constructively with creditors to deleverage Caesars Entertainment Operating Co. and create a path toward a sustainable capital structure for Caesars Entertainment Operating Co. that is in the best interest of all stakeholders,” said Caesars CEO Gary Loveman in a statement.

However, analysts believe the restructuring cannot be complete without a court-monitored bankruptcy to fix the balance sheet.

“These steps are just part of a long march to a likely late-in-the-year restructuring announcement,” said KDP Investment Advisors gaming analyst Barbara Cappaert in an interview with the Las Vegas Review-Journal. “It appears that first lien creditors are the focus of the discussions for now.”

Chris Snow, a New York-based analyst at researcher CreditSights Inc., told Bloomberg News that a transfer of assets would have to be done at least 90 days before a Chapter 11 filing.

“The first-lien lenders want to protect themselves in bankruptcy,” Snow said. “The company is saying it needs to grant the liens on this cash in order to move (debt talks) forward.”

Earlier this month, Caesars said it received a notice of default from a group of second-lien holders covering $3.7 billion of the company’s debt. The company said it was “reviewing the notice.”