Oct 09, 2014 Newsdesk Latest News, Top of the deck, World  
A fund representing a group of Caesars Entertainment Corp bondholders has declared that one of the company’s subsidiaries is in default on a portion of its borrowing after it pledged collateral to senior creditors.
Caesars declared the event in a regulatory filing, but has declined to comment further.
The notice of default was sent by Wilmington Savings Fund Society, a trustee representing US$3.7 billion of Caesars Entertainment Operating Co’s (CEOC) 10-percent second lien notes due in December 2018.
The notice alleges that the failure by CEOC to grant a lien – the right of a creditor to sell the collateral property of a debtor who fails to meet the obligations of a loan – to the second lien collateral agent “constitutes a default under the indenture and the second lien collateral agreement,” Caesars disclosed in a filing to the U.S. Securities and Exchange Commission.
Caesars is a major casino operator in the United States but has long coveted an operation in Asia. It is a joint venture investor in a planned casino resort at Incheon, South Korea. It hopes to open the first phase of the venue by 2018.
The company is also interested in entering Japan, if casino gambling is legalised there. Gary Loveman, chief executive of the Las Vegas-based casino operator, has said the company could raise more debt to finance a Japan venture.
The consolidated company’s long-term debt reached US$24.2 billion at the end of June, up from US$20.9 billion in December, according to industry analysts.
The company has sold assets, transferred properties between units, refinanced some debt and sold equity to stay solvent. Bloomberg News reported in September that the casino operator was engaging a larger group of creditors to explore options to cut its long-term debt.
In August, the firm announced a deal that it said would reduce CEOC’s debt by US$548 million and cut interest expense by US$34 million annually.
The casino operator is also suing some institutional investors in New York state court in Manhattan claiming they tried to push CEOC into default.
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New South Wales Independent Casino Commission