Key court decision coming July 22
The beleaguered restructuring plan of Caesars Entertainment Operating Company (CEOC), the bankrupt largest operating unit of Caesars Entertainment Corp., may have gotten a lifeline.
Bloomberg reports that billionaire John Paulson’s hedge fund, which is the second-largest shareholder of parent Caesars Entertainment behind the controlling consortium of Apollo Global Management and TPG Capital Management, is close to a deal to salvage the bankruptcy restructuring plan of CEOC.
Paulson & Co. is among a group or creditors pushing for a deal on the restructuring, according to unnamed sources in the Bloomberg report. According to the report, Paulson and other junior debt holders for CEOC including Canyon Partners and Soros Fund Management are discussing the restructuring with an aim to extract better terms for the creditors.
Paulson is reportedly seeking an increased equity stake in the operating company post-bankruptcy in exchange for supporting the restructuring.
CEOC’s restructuring plan before the U.S. Bankruptcy Court was negotiated among senior creditors over four months late last year, and the plan became the basis of the voluntary bankruptcy petitions Caesars filed on January 15. The operator since has been in an effort to line up enough senior creditors to win court approval of the plan, which would slice $10 billion of CEOC’s $18 billion in debt.
None of the officials involved in the reported negotiations commented to Bloomberg on the subject.
News of the new negotiations with the Paulson group comes as company officials continue talks with first-lien bondholders to refine the restructuring agreement hammered out last fall.
The entire situation could soon change. Separate groups of junior creditors will hear this week whether their cases against the parent Caesars Entertainment can go forward while CEOC is in bankruptcy. Bankruptcy Judge A. Benjamin Goldgar is set to rule on Wednesday whether lawsuits against the parent company in other courts can continue while the subsidiary is in bankruptcy.
Caesars has indicated liabilities from the suits moving forward would likely force the parent company into bankruptcy, with no protection for the equity of the parent company.
Meanwhile, Caesars Entertainment Corp.’s bankrupt operating division recorded a net income of $24.9 million during May, according to a securities filing.
CEOC reported $339.6 million in total revenue during the month, which included $246 million in casino revenue, according to the filing with the Securities and Exchange Commission.
CEOC controls Caesars Palace, Caesars Atlantic City, Harrah’s Reno and more than a dozen regional properties. Because of the bankruptcy reorganization, the division has to file monthly operating results.
