Caesars Entertainment Corp’s bankrupt operating unit on Thursday said it had filed an amended plan of reorganisation that would convert the unit into a real estate investment trust (REIT).
The plan, filed by Caesars Entertainment Operating Co (CEOC), would eliminate about US$10 billion in aggregate debt from the unit’s balance sheet if confirmed, the company said in a press release.
“The amended plan provides for a comprehensive restructuring transaction,” CEOC said, adding that the plan is supported by more than 80 percent of its senior creditors and that it “also provides for enhanced recoveries” for its junior creditors.
CEOC entered voluntary bankruptcy under Chapter 11 of the U.S. Bankruptcy Code on January 15, with US$18 billion of debt.
On Thursday, the operating unit said that it has also asked the bankruptcy court to extend to March 15 next year the court’s control over its Chapter 11 restructuring, while CEOC tries to persuade bondholders to sign up for the new plan. The resulting REIT would still have credit support from Caesars Entertainment, it added.
The amended plan is subject to confirmation by the bankruptcy court.
CEOC said that December 15 is the earliest it can get a court hearing relating to its proposed plan. The company is also awaiting a review of pre-bankruptcy dealings from an independent examiner, it said.
“The extension sought will provide CEOC additional time to pursue its amended plan on an exclusive basis while it seeks to build further consensus for the amended plan,” the firm said.
CEOC additionally said it would start a potential sales process to test values under its new plan; while continuing talks with some warring creditors, whose position was strengthened by a court victory on Thursday.
A U.S. federal judge in Chicago ruled that the bankruptcy of CEOC couldn’t shield the parent company from investors’ lawsuits. Creditors claiming billions of U.S. dollars from Caesars Entertainment have accused the Las Vegas-based company of saddling the bankrupt unit with too much debt and too few assets.
The lawsuits against Caesars Entertainment can proceed in New York and Delaware, the judge ruled hours after the casino operator revealed its new restructuring plan. The court’s latest decision sides with a similar ruling by a U.S. bankruptcy judge in July.
“We believe our defences in the New York litigation are strong, and will continue to contest those cases vigorously,” a Caesars spokesman told Reuters news agency. “In the meantime, CEOC’s senior creditors have expressed their support for CEOC’s restructuring plan and the company is continuing its efforts to reach a consensual agreement with junior creditors,” the spokesman added.
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"I am not going to speculate on what the [casino licence refreshment] tender requirements would be. I have full confidence and faith in the Macau government to treat everyone fairly"
Wilfred Wong Ying Wai
President and chief operating officer of Macau-based casino operator Sands China