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Caesars again rebuffs debt holders' request for payment

19 February 2015

LAS VEGAS -- Caesars Entertainment Corporation provided a simple answer to another request from second-lien bondholders to repay more than $3.8 billion owed by the casino operator: No.

In a filing Wednesday with the Securities and Exchange Commission, Caesars dismissed as “meritless” a request from the Wilmington Savings Fund Society for immediate payment of $3.68 billion in principal and $185 million in interest. Caesars denied the company had any payment guarantee that was alleged by the bank, which represents second-lien creditors.

Wilmington Savings has sued Caesars over the debt, which is one of several lawsuits the company faces while it tries to reorganize its Caesars Entertainment Operating Co. through a prepackaged bankruptcy filing with the U.S. Bankruptcy Court in Chicago.

The company has a deal in place with first-lien bondholders and banks to eliminate more than $10 billion of CEOC’s $18.4 billion debt load.

Caesars is seeking court approval to convert CEOC into a publicly traded real estate investment trust. CEOC controls Caesars Palace, Caesars Atlantic City, Harrah’s Reno Casino and Hotel and more than a dozen regional properties.

The REIT concept would split CEOC into two companies, including one owning real estate for many of the company’s casinos. A second company would manage the properties and pay a rent to the ownership company.

The restructuring may take up to a year to finalize.

Earlier this month, Caesars announced company Chairman Gary Loveman would give up the CEO position on June 30. He will be replaced by Mark Frissora, the former chairman and CEO of Hertz Global Holdings.

Frissora, who spent seven years with the automobile and equipment rental car company, will be “CEO designee” until July 1, when he formally becomes CEO. Last week, New Jersey gaming regulators approved Frissora’s appointment.

Caesars shares gained 7 cents, or 0.65 percent, Wednesday to close at $10.86 on Nasdaq.
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