IAG JANUARY 2015 - page 27

January2015
inside
asiangaming
27
Feature
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,
Bloomberg
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
Caesarswantsapre-packagedbankruptcy
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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