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Gaming Guru

Howard Stutz

Creditor walks away from restructuring talks with Caesars

30 October 2014

LAS VEGAS -- One of Caesars Entertainment Corporation’s main creditors has walked away from talks on restructuring a large portion of the casino company’s $24.2 billion debt.

In a filing with the Securities and Exchange Commission on Wednesday, Caesars said the creditor declined to extend a nondisclosure agreement to gain access to private information about the company’s operating units.

Caesars didn’t name the creditor. Bloomberg News reported that Perry Corp., a hedge fund firm, quit the talks.

Fitch Ratings Service gaming analyst Alex Bumazhny said the SEC filing “reconfirms that there are a lot of moving parts and getting a deal done would be a laborious process if at all possible.”

Caesars has said private talks with banks and lenders could lead to a restructuring of its industry-high debt. Bloomberg News has reported the talks cover $18.3 billion of the debt.

“While no agreement has been reached yet on the terms of a restructuring, (Caesars is) continuing discussions with the remaining first-lien creditors, all of whom have extended their (nondisclosure agreements),” the company said.

Caesars didn’t disclose details of restructuring proposals with the creditor, saying they “contain outdated and materially different terms and information than proposals now being considered and accordingly are not disclosed herein.”

Several of its second-lien bondholders filed notices of default against the company this month covering $3.7 billion of the debt. Caesars, in SEC filings, said it is reviewing the notices.

Caesars has carried its debt since the company was taken private in a $30.7 billion buyout in 2008.

The company — which operates more than 50 casinos in the United States, including nine on or near the Strip, is trying to repair its balance sheet and avoid a trip to Bankruptcy Court.

Several analysts and debt ratings services have said Caesars will resolve its issues only through bankruptcy.

Caesars Chairman Gary Loveman has said direct talks with banks and creditors could “create a path toward a sustainable capital structure” for the company.

Loveman told the Las Vegas Review-Journal in September it “had made progress” with its unsecured creditors and talks with the first-lien holders “was an important step.”

Caesars announced an overall restructuring plan in May that eliminated more than $1 billion in debt that was due next year while providing a different ownership structure to pieces of the company. It recently raised $1.75 billion in new debt associated with 2015 debt retirement and also paid down $800 million of its debt due in 2016.

It installed new management of Caesars Entertainment Operation Co., which operates 44 casino properties in 13 states — the largest chunk of the company’s operating divisions.

Caesars Entertainment Operation owns Caesars Palace, Caesars Atlantic City, Harrah’s Reno and many of the company’s regional properties.

Casinos and properties held under Caesars Entertainment Operation owe about 80 percent of the company’s overall debt.

Caesars’ other major operating division is Caesars Growth Partners, which is publicly traded on Nasdaq as Caesars Acquisition Co. The business, 57 percent owned by Caesars Entertainment, includes The Cromwell, the Quad, Bally’s Las Vegas, Planet Hollywood Resort, Harrah’s New Orleans, a 41 percent interest in Horseshoe Baltimore and Caesars Interactive Entertainment.
Creditor walks away from restructuring talks with Caesars is republished from