Caesars Entertainment Operating Company Agreement Reached


Caesars Entertainment Corporation and Caesars Entertainment Operating Company (CEOC) announced entry into a restructuring agreement with holders of a significant amount of CEOC’s second-lien notes. The agreement will become effective when holders owning greater than 50% of second lien debt sign the agreement.

Pursuant to the agreement, second lien noteholders who sign the agreement by the date holders owning greater than 50% of second lien debt sign the agreement, (or 10 days after such date if occurring before August 19, 2015), shall receive a forbearance fee. Holders eligible to receive the fee will receive their pro rata share of at least $200 million in convertible notes to be issued by Caesars Entertainment in consideration for forbearing in respect to certain alleged defaults. These holders also have the potential to receive an additional $200 million of convertible notes either directly or through an enhanced class recovery as outlined more fully below.

The release notes, “The proposed transactions would reduce CEOC’s debt by approximately $10 billion, providing for the exchange of approximately $18.4 billion of outstanding debt for $8.6 billion of new debt. Annual interest expense would be reduced by approximately 75%, from approximately $1.7 billion to approximately $450 million. PropCo would lease its real property assets to OpCo in exchange for annual lease payments of $635 million, subject to certain adjustments, with the lease payments guaranteed by Caesars Entertainment.”

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