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Caesars Entertainment Operating Company Covenant Breach Announced

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According to documents filed with the SEC, Caesars Entertainment Corporation (CEC) announced that it received notice from its creditors claiming to hold a majority of the claims (the Majority Bank Creditors) under the first lien bank debt incurred by Caesars Entertainment Operating Company (CEOC), pursuant to third amended and restated credit agreement by and among CEC, CEOC, lenders party thereto and Credit Suisse AG, alleging breaches of certain covenants and obligations.

The filing explains, “In particular, the Notice alleges that the PropCo First Lien Credit Agreement Documents (as defined in the Debtors’ Third Amended Joint Plan of Reorganization [the ‘Plan’]) are materially inconsistent with the Bank RSA and unacceptable to the Majority Bank Creditors and CEOC is in breach of certain covenants relating thereto. The Notice states that pursuant to the Bank RSA, the unacceptable terms of the PropCo First Lien Credit Agreement Documents and existing covenant breaches, if not cured by 12:01 a.m. on December 24, 2016, shall give rise to ‘Creditor Termination Events’ (as defined in the Bank RSA) that entitle the Majority Bank Creditors to immediately terminate the Bank RSA.”

CEC notes that the applicable parties are currently in discussions; however, should the Bank RSA terminate, other creditors would also have the right to terminate support of the Debtors’ restructuring. CEC’s filing also states, “Further, as currently drafted, the Plan requires Majority Bank Creditor support in order to become effective.”

Read more CEOC bankruptcy news.