Las Vegas-based Caesars Entertainment Corp said several creditors exited discussions with the casino operator over a large portion of the company’s high debt, most of it issued by Caesars Entertainment Operating Co (CEOC).
In a filing to the U.S. Securities and Exchange Commission, Caesars said several first-lien bank lenders had left the talks, but said it “believed an oral agreement in principle had been reached between certain parties”.
The company said any additional talks would be “with respect to finalising the material economic terms of a restructuring.”
Caesars, which wants to grow its footprint in Asia after failing to enter the Macau market, is struggling to cope with a slow recovery in gambling spending nationally in the U.S. and the debt it took on in a 2008 leveraged buyout.
The long-term debt of the company’s consolidated business reached US$22.9 billion at the end of September, down from US$24.2 billion at the end of June.
The casino operator has been working to seal an agreement with its creditors to put CEOC into Chapter 11 bankruptcy by January 15, Bloomberg News reported.
The business unit would then be split into a real estate investment trust that would own Caesars’s properties – including Caesars Palace (pictured) – and another unit that would manage them.
According to Bloomberg, KKR & Co and Franklin Resources Inc were among holders of the company’s bank loans that exited the negotiations. BlackRock Inc, an owner of the company’s first-lien bonds, also left the talks, Bloomberg said citing unidentified sources.
The casino operator did not name the lenders that withdrew from the discussions.
The stalled discussions were outlined in statements from the creditors on Friday, after the non-disclosure agreements expired. The creditors released hundreds of pages of documents detailing Caesars’ plans.
The bank-loan group said in a statement that it had reached an “oral agreement in principle with the company on certain material economic terms” for a restructuring in bankruptcy court. That deal was contingent upon the company reaching an agreement under the same terms with the bondholder group of creditors, the bank-loan group said. It added that Caesars hadn’t yet done so when they left negotiations.
Caesars must decide whether to make about US$224 million in interest payments on Monday to junior creditors that the senior lenders don’t want paid.
Fitch Ratings Inc has speculated that the company may skip that payment in order to keep the cash it has left to pledge to its creditors first-in-line to be paid.
The U.S.-based casino operator has plans to expand in Asia. Caesars plans to invest more than US$1 billion in a casino resort near the Manila International Airport in the Philippines.
The firm is also a partner in a consortium that plans to break ground next year on a casino project in South Korea’s Incheon.
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”We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion”
Analyst at Union Gaming Securities Asia