IAG JANUARY 2015 - page 27

to take theunit into theprotectionofChapter 11of theUSBankruptcy
Codeandquickly lead it out againonmoreor less amicable terms as
a partner in anewlyminted real estate investment trust with its debt
load shavedbymore thanhalf.
Caesars’management and itsprivate-equity owners, TPGCapital
and Apollo Global Management, want this to happen between the
15th and 20th of this month. The timing is significant because a
sizable number of second-tier creditors are not happy about where
all this isgoingandare suing toput CEOC in receivership. AChapter
11 filingwould automatically halt their claims.
Caesars also is working against a 30-day grace period to make
good on a $225 million interest payment owed a number of these
same lenders. The payment was due in mid-December. Caesars
skipped it and comemid-January is officially indefault.
The pre-packaged plan would compensate first-in-line creditors
with cash, securities and equity in the REIT structure that would
require them to exchange their $18.4 billion for $8.6 billion of new
debt. Five lenders were said to be in agreement, representing 39%
of the senior obligations, according to a company filingwith theUS
Securities and Exchange Commission. Reporting on Christmas Eve,
said 60%were needed by 5th January for the plan to go
forward. Caesars said the 9th is the operative date. However, several
major creditors—holders of both bank loans and first-lien bonds—
have quit the talks, and by doing so are free to trade the debt. The
measureof theirdissatisfactionwasapparentwhen thebank lenders,
whopresumably are to bemade 100%whole in the deal, posted the
company’s previously confidential proposals online.
Thequestion for Caesarswaswhether toproceed intoChapter 11
without their blessing, a perilous course in all likelihood, onewhose
outcomenoone canpredict.
Analysts are divided. Some say the REIT structure sets Caesars
firmly on the road to profitability. Others argue that any consensus
agreement thatwould compensatefirst-
in-line creditorswith cash, securitiesand
equity inanewREIT structure.However,
severalmajor creditors—holdersofboth
bank loansandfirst-lienbonds—have
quit the talks.Themeasureof their
dissatisfactionwasapparentwhen thebank
lendersposted the company’spreviously
confidential proposalsonline.
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