Caesars to work with bondholders to restructure exceptionally large USD 24 B debt

Bloomberg News reported Monday that the talks would involve at least five senior bondholders: Pacific Investment Management Co., Elliott Management, BlackRock, Brigade Capital Management and Beach Point Capital Management. The companies have agreed to enter confidentiality agreements with Caesars to formally begin talks.

In an interview with the Las Vegas Review-Journal in Atlantic City, Caesars Entertainment Chairman Gary Loveman said the company “had made progress” with its unsecured creditors and talks with the first lien holders “was an important step” in moving forward with healing the company’s balance sheet.

Loveman was encouraged the company would talk directly with the bondholders and not advisers. “I believe constructive discussions will occur,” Loveman said. “Our aim is to get something resolved in the next few weeks.”

Caesars Entertainment has taken steps in the past 18 months to restructure the company’s debt load, much of which stems back to its US$ 31 billion private equity buyout by Apollo Global Management and TPG Capital in 2008.

Loveman has described Caesars Entertainment as the holding entity for three subsidiary organizations, “two of which are in very good health. A third is overlevered and has pressing debt issues.”

Caesars Entertainment Resort Properties, includes the Linq development on the Strip, and Caesars Growth Partners, operates six resorts and the company’s online and social gaming products.

Caesars Entertainment Operation, however, operates 44 casino properties in 13 states — the largest chunk of the company’s operating divisions. CEOC owns Caesars Palace, Caesars Atlantic City, Harrah’s Reno, and much of the company’s regional properties.

Casinos and properties held under CEOC owe roughly 80 percent of the company’s overall debt. “It’s important to make that distinction,” Loveman said. “It is one part of Caesars. It is not by any means all of Caesars.” He said the company is committed to “working constructively with creditors to deleverage CEOC and create a path toward a sustainable capital structure for CEOC that is in the best interest of all stakeholders.”

Caesars, which operates more than 50 casinos in 13 states, has closed two casinos this year, the Showboat in Atlantic City and Harrah’s Tunica. Caesars still operates three casinos in Atlantic City, which will shrink to eight casinos next week when Trump Plaza closes.

Loveman said the company has no immediate plans to close any other properties.