Caesars merger altered to appease creditors

12 July 2016

Caesars Entertainment Corp (CEC) has amended a merger agreement with Caesars Acquisition Co (CAC) as it seeks to appease creditors involved in the $18 billion (€16.2 billion) bankruptcy restructuring of Caesars Entertainment Operating Co (CEOC), the gambling company’s main operating unit.

CEOC last month received approval from a US Bankruptcy judge to begin seeking votes from creditors on its plan to restructure its debt and exit bankruptcy, which would include slashing $10 billion of debt and splitting the unit into a new operating company and a real estate investment trust.

CEC is contributing billions of dollars of cash and equity to CEOC and its creditors, with part of that generated by its merger with CAC.

Under the amended terms, CAC shareholders will receive 27% of the merged entity, which is reduced from the 38% that was originally proposed to generate further funds.

The changes to the deal come after investors in the operating unit’s second-lien bond debt suggested CEC is not contributing enough to compensate for a series of transactions they allege removed billions of dollars of value out of the operating unit before it filed for bankruptcy.

While CEC denies the accusations, it has boosted its contribution to the chapter 11 plan to about $4 billion, after a bankruptcy court-ordered investigation suggested the unit was wronged in pre-bankruptcy dealings.

Related article: Caesars proposes revised $4 bn bankruptcy plan