Inside Asian Gaming

January 2015 inside asian gaming 27 Feature to take the unit into the protection of Chapter 11 of the US Bankruptcy Code and quickly lead it out again on more or less amicable terms as a partner in a newly minted real estate investment trust with its debt load shaved by more than half. Caesars’ management and its private-equity owners, TPG Capital 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 is going and are suing to put CEOC in receivership. A Chapter 11 filing would 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 come mid-January is officially in default. 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 filing with the US 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 measure of their dissatisfaction was apparent when the bank lenders, who presumably are to be made 100% whole in the deal, posted the company’s previously confidential proposals online. The question for Caesars was whether to proceed into Chapter 11 without their blessing, a perilous course in all likelihood, one whose outcome no one can predict. Analysts are divided. Some say the REIT structure sets Caesars firmly on the road to profitability. Others argue that any consensus Caesars wants a pre-packaged bankruptcy agreement that would compensate first- in-line creditors with cash, securities and equity in a new REIT structure. However, several major creditors—holders of both bank loans and first-lien bonds—have quit the talks. The measure of their dissatisfaction was apparent when the bank lenders posted the company’s previously confidential proposals online.