Casino company Caesars Entertainment Corp and Caesars Acquisition Co announced on Monday that they have amended their proposed merger agreement. The deal – originally proposed in December 2014 – is connected to the US$18 billion bankruptcy of Caesars Entertainment’s main operating unit, Caesars Entertainment Operating Co Inc (CEOC).
CEOC, which owns and operates 38 gaming and resort properties, received approval from a U.S. Bankruptcy judge last month to begin seeking votes from creditors on its plan to restructure its debt and exit bankruptcy.
The operating unit in January 2015 voluntary filed for reorganisation under Chapter 11 of the U.S. Bankruptcy Code. In October, CEOC filed a plan of reorganisation that – if approved – would eliminate about US$10 billion in aggregate debt from its balance sheet and would convert the unit into a real estate investment trust (REIT).
Caesars Entertainment is contributing cash and equity to CEOC to help repay creditors. Some of that cash is expected to be generated by merging Caesars Entertainment with Caesars Acquisition.
Under the amended terms, Caesars Acquisition shareholders will receive 27 percent of the merged entity. Under the original proposal, they would have received 38 percent, according to regulatory filings quoted by news agency Reuters.
“The amended and restated merger agreement represents an important milestone in the ongoing restructuring of CEOC, as the restructuring is contingent upon, among other things, the completion of the merger,” said Caesars Entertainment in Monday’s statement.
“Caesars Entertainment and CEOC are encouraged by the recent progress made with key creditor groups, and are pleased with the support received to date for CEOC’s plan of reorganisation,” the parent company added.
The junior creditors remain the biggest obstacle for the restructuring of CEOC and a temporary halt on lawsuits against the parent company expires in August. Caesars Entertainment has said that court rulings in favour of the bondholders could threaten its contribution to the reorganisation plan.
A confirmation hearing for CEOC’s reorganisation plan has been set for January 17, 2017.
