Representatives of Caesars Entertainment Corp. announced that the company has made yet another attempt to win over the junior bondholders of the bankrupt division. The company has offered them a financial package with the aim of convincing them consider a restructuring deal.
What made Caesars take such a move was their willingness to attract more creditors supporting their plan for neutralizing the litigation and reducing the debt. Currently, Caesars is at risk of being forced to close its operating unit and announce bankruptcy. Back in January 2015, the division filed for chapter 11 protection with the intention of reducing the overwhelming debt of $18 billion.
Junior bondholders were among the opponents of the plan for Caesars division bankruptcy. Matters were even taken to court where a bondholders’ trustee is suing Caesars for having taken inadequate measures for prevention of the bankruptcy. According to Caesars’ officials, the allegations are groundless, but the judge allowed them to proceed.
As for the latest deal, made to the junior creditors, they are offered much more than what was initially proposed. The proposal includes the bankrupt unit to be transformed into a real-estate investment trust where they will be the major owners.
The junior creditors will have to split a package of securities amounting $400 million as well as a 10% stake in REIT entity. The share every bondholder is eligible to get will depend on their involvement in the deal and on the time they sign on.
The company released details on the matter and according to the information, the majority of junior creditors have already given their consent to the plan.
According to people with knowledge on the matter, major shareholders in Caesars’ parent company have obtained junior debt in the operating company. In addition, they have made attempts to come to an agreement.
According to a reliable source, Caesars has already entered into talks with the senior bondholders who gave their nod to the restructuring plan in which junior bondholders are allowed to participate.
The judge in charge of making decisions for the fate of Caesar’s bankruptcy unit is to rule on the request related to the shield on litigation filed against Caesar’s parent company.
Back in 2008, the company was acquired by Apollo Global Management LLC and TPG, which have remained its major shareholders during the years. However, the deal led to a number of capital market transactions and serious financial issues.
