Caesars clears threshold for creditor support of bankruptcy plan

An exterior view of Caesars Palace, June 6, 2013.

Caesars Entertainment has cleared a critical threshold of creditor support for a bankruptcy restructuring plan in its operating subsidiary, the casino company announced today.

In a filing with the Securities and Exchange Commission, Caesars said that more than 60 percent of first-lien bondholders have signed on to a plan that will slash nearly $10 billion of the subsidiary’s $18.4 billion debt.

Caesars needed at least 60 percent of those bondholders to support the plan by Monday; yesterday, the company announced it had more than 50 percent support.

Additionally, Caesars said in a news release that “subject to the closing of certain purchases of additional First Lien Notes,” it will have more than 67 percent support. Those purchases should occur today, Caesars said.

Surpassing the 60 percent threshold prepares the subsidiary, Caesars Entertainment Operating Company or CEOC, to file for bankruptcy later this month.

“We are pleased to have the support of our first lien noteholders on CEOC’s restructuring plan. This is an important step in the process that will allow us to move ahead with our plan to create a strong and sustainable capital structure for CEOC,” Caesars CEO Gary Loveman said in the news release.

Support for the plan doesn’t mean Caesars is out of the woods. Reuters reported that while two-thirds of support from first-lien noteholders allows Caesars to enforce the bankruptcy plan, the company still has to prove the plan is fair.

“I don’t think we’ve seen the fireworks in this one yet,” Maglan Capital President David Tawil told Reuters.

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.

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.

Shares of Caesars were down nearly 2 percent on the Nasdaq today.

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