Caesars Entertainment Operating Company Restructuring Update Issued


According to documents filed with the SEC, Caesars Entertainment Operating Company issued the following restructuring update: “Caesars Entertainment Corporation (‘CEC’) and Caesars Entertainment Operating Company, Inc., a majority owned subsidiary of CEC (‘CEOC’), announced that while they have been engaged in confidential discussions with certain beneficial holders (the ‘Bank Lenders’) of first lien debt (the ‘Bank Debt’…, they have not at this time been able to reach an agreement with the Bank Lenders regarding the Restructuring….The Bank Lenders’ NDAs with CEC and CEOC have now expired pursuant to their terms. CEC is making the disclosures herein in accordance with the terms of the Bank Lenders’ NDAs.”

The same SEC filing further explains, “…a meeting occurred among CEC, CEOC and the Bank Lenders, together with each of their respective legal and financial advisors. CEC and CEOC provided the information…to the Bank Lenders and their advisors which, in addition to conveying CEC’s and CEOC’s views, also described some, but not all, of the terms contained in a proposal previously provided by the Bank Lenders to CEC and CEOC. Specifically, the Bank Lenders had included a larger convertible note than that described in the Discussion Materials.”

The SEC filing continues, “In addition to the Discussion Materials, in the meeting with the Bank Lenders, CEC proposed, in response to issues raised by the Bank Lenders and in order to try to reach a consensual agreement with the Bank Lenders (1) to amend the existing guarantee with respect to the amounts outstanding under the Credit Agreement (the ‘CEC Credit Agreement Guarantee’) to guarantee (a) the New First Lien OpCo Debt and New Second Lien OpCo Debt to be received by the Bank Lenders in the Restructuring and (b) the CPLV Mezzanine Debt, if any, to be received by the Bank Lenders and (2) an additional payment of $39 million by CEC (inclusive of any additional monthly adequate protection payments for a total payment of $300 million over twelve months) to the Bank Lenders to settle any possible claims under the CEC Credit Agreement Guarantee. In response, the Bank Lenders proposed that (x) the guarantee described in (1) above be a payment guarantee secured by all assets of the parent guarantor, (y) the Bank Lenders receive their full non-default contractual rate of interest (as opposed to their earlier request for default rate of interest) for the full post-petition period from CEC (less the monthly adequate protection payments at a rate equal to 1.5% per annum to be made to the Bank Lenders pursuant to the terms of CEOC’s cash collateral order) with an upfront payment by CEC for forbearance from the exercise of certain rights and remedies equal to the amount of interest due for one quarter, and (z) CEC make an additional payment of $294 million to the Bank Lenders at Exit to the extent that CEOC was otherwise unable to syndicate the New First Lien PropCo Debt in the market. The Bank Lenders’ proposals were not acceptable.”

Read more about the CEOC restructuring.