Caesars entities enter support agreement with second-lien noteholders

By Caroline Salls

Pittsburgh, Aug. 1 – Caesars Entertainment Corp. and Caesars Entertainment Operating Co., Inc. (CEOC) have entered into a restructuring support agreement with holders of a significant amount of CEOC’s second-lien notes, according to an 8-K filed Monday with the Securities and Exchange Commission.

The company said these noteholders, together with the second-lien notes held by parties subject to other restructuring support agreements, hold roughly 37% of CEOC’s second-lien notes.

The agreement provides for a substantial improvement in recoveries for second-lien noteholders to those contemplated in CEOC’s plan of reorganization and adds to the group of creditors supporting CEOC’s restructuring plan.

Specifically, the agreement provides all holders of second-lien notes with recoveries of at least 46 cents on the dollar based on the midpoint valuation in CEOC’s disclosure statement.

The agreement will take effect when it is signed by holders owning greater than 50.1% of the second-lien notes.

The recoveries of second-lien noteholders who sign the agreement will increase by an additional 4 cents on the dollar when the agreement takes effect and a further 5 cents on the dollar when the agreement gains the support of at least two thirds of the class, or CEOC’s restructuring plan takes effect, bringing the potential recovery to 55 cents on the dollar for all signers of the agreement.

The expected recovery includes a combination of convertible notes and equity in new Caesars, the surviving entity in the planned merger of Caesars Entertainment and Caesars Acquisition Co.

The Caesars debtors agreed to amend the CEOC plan so holders of second-lien bond claims will receive their share of $790.98 million aggregate principal amount of 5% convertible senior notes, which may be converted for up to 9.646% of equity and operating company series A preferred stock, which will be exchanged for 23.135% of new common equity.

The Caesars entities said they will seek to gain further support from additional second-lien noteholders.

Based in Las Vegas, Caesars is a casino entertainment company that filed for bankruptcy on Jan. 15, 2015 in the U.S. Bankruptcy Court for the Northern District of Illinois under Chapter 11 case number 15-01145.

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