Caesars Entertainment has achieved a major turning point in addressing its substantial debt burden. They’ve negotiated an agreement valued at $5 billion with a majority of the creditors of its insolvent subsidiary, Caesars Entertainment Operating Company (CEOC). This subsidiary had declared bankruptcy in 2015, burdened by a staggering $18 billion in liabilities.
A key point of dispute centered around private equity groups Apollo Global Management and TPG Capital Management, who were alleged to have divested assets from CEOC. To avert a legal battle, they’ve consented to diminish their ownership in Caesars from 66% to 16%.
As part of this revised restructuring strategy, creditors will now possess a dominant 70% stake in the reorganized Caesars. In contrast, Apollo and TPG will maintain a minority interest but are released from the possibility of legal actions. This arrangement signifies a notable victory for junior creditors, who will obtain a combination of cash, equity, and convertible securities valued at 66 cents on the dollar – a substantial enhancement from Caesars’ prior proposal.
Bruce Bennett, the legal representative for the collective of subordinate creditors, appeared quite pleased with the current progression of the situation. He maintains optimism about reaching an agreement in the near future, though he acknowledges that significant work remains.