Caesars turns down request from second-level bond holder

Last week, 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 has said there isn’t any guarantee by the parent company on second level notes.

Several second-lien bondholders have sued Caesars over the debt 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 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.

Caesars, which reports fourth-quarter and year-end earnings next week, has $22.8 billion in long term debt.

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.