Caesars Entertainment Operating Co Inc (CEOC), a unit of Las Vegas-based casino operator Caesars Entertainment Corp, on Thursday voluntary filed for bankruptcy. The request for reorganisation under Chapter 11 of the U.S. Bankruptcy Code was lodged in the Northern District of Illinois in Chicago.
“The plan … is intended to significantly reduce long-term debt and annual interest payments, while providing for significant recoveries for creditors and ensuring no interruption of operations across the company’s network of properties,” the casino operator said in a statement on Thursday.
CEOC, which owns and operates 44 gaming and resort properties, has a US$18.4 billion debt load, representing more than 80 percent of Caesars Entertainment’s total debt.
Caesars Entertainment, Caesars Entertainment Resort Properties LLC and Caesars Growth Partners LLC, which are separate entities with independent capital structures, have not filed for bankruptcy relief, Caesars Entertainment said.
The restructuring aims to reduce the billions of dollars of debt assumed in a US$30 billion leveraged buyout led by private equity firms Apollo Global Management LLC and TPG Capital Management LLP in 2008. The casino operator, which has long coveted a casino operation in Asia, has lost money every year since 2009.
Caesars Entertainment said the plan would allow the cutting of CEOC’s debt to US$8.6 billion. It added that the restructuring agreement had the support of more than 80 percent of first-lien noteholders.
Junior noteholders however oppose the plan, as they would receive only 10 U.S. cents for each U.S. dollar of debt owed. On Monday, junior creditors of the operating unit filed an involuntary bankruptcy petition in the U.S. Bankruptcy Court in Wilmington, Delaware.
The junior creditors asked the Delaware court to decide the proper venue for a bankruptcy case and issue an order putting on hold any subsequent voluntary filing outside of Delaware, Reuters reported. Caesars Entertainment opposes the bankruptcy petition in Wilmington, claiming that those creditors were acting “recklessly” to disrupt an agreement worked out with more senior noteholders.
On Wednesday, the Delaware judge refused to hold an emergency hearing until Caesars Entertainment’s operating unit had actually filed for bankruptcy. But the judge invited the creditors to “advise the court at once (regardless of the time of day or night)” when that case is filed.
When two bankruptcy applications for the same company are sought in different jurisdictions, the judge in the case that was filed first determines where they will be heard.
In Thursday’s statement, Caesars Entertainment said that all properties, including those owned by CEOC, “are open for business and are continuing to operate in the ordinary course”.
Under the terms of the proposed financial restructuring, CEOC will convert its corporate structure by separating all of its U.S.-based gaming operating assets and real property assets into an operating entity and a new publicly-traded real estate investment trust.
“We believe this restructuring is in the best interests of all of CEOC’s stakeholders and will result in a sustainable capital structure for CEOC and value creation for all stakeholders,” chairman and chief executive of Caesars Entertainment and chairman of CEOC, Gary Loveman, said in the statement.
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”Assuming that our [Tigre de Cristal] phase two project and the other future operators’ development plans remain on track, we may see the benefits of a ‘cluster’ effect [in the Primorye Integrated Entertainment Zone] as early as 2021”
Summit Ascent, lead developer of Tigre de Cristal