Caesars Entertainment refutes allegations of improper asset transfers

By Jennifer Chiou

New York, April 4 - Caesars Entertainment Corp. and Caesars Entertainment Operating Co., Inc.'s boards of directors received a letter on April 3 alleging, among other things, that the companies improperly transferred or sought to transfer assets to affiliated entities, according to an 8-K filing with the Securities and Exchange Commission.

The filing stated that the letter was sent by a law firm acting on behalf of unnamed parties who claim to be lenders under Caesars Entertainment Operating's credit agreement and/or holders of the company's first-priority senior secured notes. The parties are holders of more than $1.85 billion of Caesars Entertainment Operating's first-lien debt, the letter claimed.

Caesars Entertainment said it strongly believes there is no merit to the letter's allegations, adding that it will defend itself vigorously should any action be brought.

The transactions under question include an agreement dated Oct. 21, 2013 providing for contributions by Caesars Entertainment and its subsidiaries to Caesars Growth Partners, LLC of Caesars Interactive Entertainment, Inc. and $1.1 billion face amount of Caesars Entertainment Operating's unsecured notes in exchange for non-voting interests of Caesars Growth.

The filing stated that if a court were to order rescission or termination of the transactions, that could cause Caesars Entertainment to be in default under existing debt agreements.

The letter asserted that the consideration received by Caesars Entertainment in the transactions is inadequate and that Caesars Entertainment Corp. and Caesars Entertainment Operating were insolvent when the transactions were approved.

Caesars Entertainment is a Las Vegas-based casino-entertainment company.

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