CHICAGO—Caesars Entertainment Corp. will now contribute more than $5 billion to its operating unit's
restructuring in its final settlement offer to disgruntled bondholders, a bankruptcy lawyer said Wednesday.
David Seligman, a lawyer for the bankrupt Caesars Entertainment Operating Co., or CEOC, unit, said in
bankruptcy court that a prior pledge of about $4 billion has increased by about $1.2 billion, which he called the "best
and final proposal" in long-running negotiations with CEOC creditors and Caesars.
The increased value includes setting additional Caesars equity aside for CEOC's creditors, the result of current
Caesars backers Apollo Global Management and TPG agreeing to surrender their equity, valued at more than $950 million,
in the company.
Mr. Seligman said the increased settlement value, in return for which Caesars, Apollo and TPG will obtain broad
liability releases, should satisfy the junior bondholders that have fought CEOC's restructuring.
Junior bondholder lawyer Bruce Bennett said Wednesday in court that despite the "significant additional value" on the
table, there is still a "gap" between the offer and what the bondholders believe they're entitled to.
The offer expires Friday at 11:59 p.m. Eastern time if the junior bondholders don't accept it, and Mr. Seligman said
no deal could mean a very different reorganization plan for CEOC.
While Mr. Bennett suggested talks could continue past Friday's deadline, Caesars lawyer Thomas Kreller told the court
that the deal "is off the table" once the deadline passes.
"It's either a deal, or it's not," Mr. Kreller added.
Mr. Bennett said an issue for the junior bondholders continues to be Apollo and TPG's stake in Caesars Acquisition
Co., a publicly traded affiliate that will merge into Caesars in connection with the restructuring. The private-equity
firms are slated to hang onto this equity, giving them a minority stake in the postmerger Caesars, and Mr. Bennett said
"there's more than enough" value there to make the bondholders happy.
Efforts to make peace with the junior bondholders, however, risk alienating CEOC's bank lenders and senior
bondholders, their lawyers signaled Wednesday. These creditors have been asked to take smaller payouts as a result of
improved treatment for the junior bondholders.
"A consensual plan involves participation by every constituent," senior bondholder lawyer Kenneth Eckstein said,
adding that every creditor group should "share the pain."
The centerpiece of CEOC's chapter 11 restructuring has been a proposed settlement of the company's legal claims
against its parent and the private-equity firms related to a series of asset transfers that preceded CEOC's January 2015
bankruptcy. CEOC alleges that the transfers stripped it of valuable assets, hurting it and its creditors for the benefit
of Caesars and its backers.
Caesars, Apollo and TPG dispute the allegations and defend the deals as necessary and proper. They are hoping to be
freed from the litigation in the restructuring, and this summer, many CEOC creditors threw their support behind the
proposed settlement—except for the junior bondholder group. The bondholders had argued that the estimated $4
billion contribution from Caesars was too low and said it was unfair for the private-equity firms to receive liability
releases without chipping in to help fund the deal.
More recently, Judge A. Benjamin Goldgar, who is overseeing CEOC's chapter 11 case, has also been asking why the
private-equity firms don't appear to be contributing to the settlement. At a bankruptcy-court hearing last month, he
asked, "Why should a successful reorganization depend on a contribution from Caesars alone?"
Write to Jacqueline Palank at firstname.lastname@example.org
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