Caesars nears threshold for creditor agreement on bankruptcy plan

An exterior view of Caesars Palace.

With the deadline for a bankruptcy agreement fast approaching, Caesars Entertainment said today that more than 50 percent of first-lien bondholders signed on to a financial restructuring plan for a subsidiary of the casino company.

The company needs support from at least 60 percent of first-lien bondholders by Monday as the subsidiary, which owns Caesars Palace, seeks to file for bankruptcy later this month.

In a financial filing today, Caesars said 53 percent have signed on but that, “subject to the closing of certain purchases of additional First Lien Notes,” those creditors will hold 55 percent of first-lien bonds.

“We are pleased with the early support of our creditors as we move forward in implementing our previously announced restructuring plan to strengthen (the subsidiary’s) financial condition and better position the Company for future growth, investment and success,” Caesars CEO Gary Loveman said in a statement accompanying the financial filing.

In the statement, Caesars said it continues to “actively work with its creditors to gain further support for the transaction.”

Fitch Ratings analyst Alex Bumazhny said today’s announcement was a step forward, but that even if Caesars gets enough creditors to approve its plan, hurdles will remain.

“It looks like there’s a pretty good chance they’ll get over the 60 percent threshold to get the agreement to become effective, but they’ll still have to get through bankruptcy,” he said.

Under the restructuring plan announced in December, the subsidiary would be transformed into an operating company to run its casinos and a property company that would own them. The property company would be owned by a real estate investment trust.

The plan would slash the subsidiary’s $18.4 billion debt by about $10 billion, Caesars has said.

Bloomberg News, citing anonymous sources, first reported Wednesday that Caesars had won support from more than 50 percent of first-lien bondholders.

At the same time, Bloomberg reported that investors claiming to own $1.6 billion of first-lien notes hired a law firm to negotiate for better terms.

The subsidiary poised to file for bankruptcy, called Caesars Entertainment Operating Company, is one of several Caesars divisions.

In addition to owning Caesars Palace, the subsidiary manages other properties on the Strip, including the Flamingo, Paris and Planet Hollywood. It owns or manages many more Caesars properties in other locations.

In late December, Caesars announced it would merge with another affiliate to provide cash that will help fund the restructuring.

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