Harrahs Entertainment has made substantial progress in satisfying its debtors, securing a $50 billion financial reorganization agreement with a majority of the creditors of its insolvent subsidiary, Caesars Entertainment Operating Company Inc (CEOC).
CEOC sought bankruptcy protection in January 2015, burdened by $18 billion in liabilities. Caesars Entertainment and Caesars Acquisition Company had modified proposed amalgamation conditions in July 2016, seeking to furnish compensation to the operating unit’s lenders.
This latest advancement resolves a protracted disagreement between CEOC’s creditors and the company’s private equity investors, Apollo Global Management and TPG Capital Management, who were alleged to have divested assets from the firm.
Apollo and TPG have consented to diminish their controlling interest in Caesars to 16%, effectively circumventing a series of complex legal actions that arose from an August decision by US Bankruptcy Court Judge Benjamin Goldgar, who declined to prolong an injunction prohibiting bondholder suits against Caesars.
Under the restructuring blueprint, creditors will possess 70% of the reorganized Caesars, Apollo and TPG will maintain a minority interest, and they will no longer confront lawsuits.
As reported by the Financial Times, junior bondholders will now obtain a combination of cash, equity, and convertible securities valued at 66 cents on the dollar, a considerable improvement from the 27 cents Caesars had initially proposed.
Theres still a journey ahead, but we’re pleased with the advancements made and eagerly anticipate concluding this matter,” remarked Bruce Bennett, an attorney acting on behalf of a group of subordinate debt holders.
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