Caesars offers another $1.6 billion to creditors of bankrupt unit

Wed Sep 21, 2016 5:24pm EDT
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By Karen Pierog

CHICAGO (Reuters) - Caesars Entertainment Corp (CZR.O: Quote) said on Wednesday it proposed along with its private equity backers a settlement offer with an added $1.6 billion for creditors of its casino operating unit, raising hopes of an end to the subsidiary's costly bankruptcy.

Caesars closed at $8.10 on Nasdaq, up 21.4 percent.

Apollo Global Management (APO.N: Quote) and TPG Capital Management [TPG.UL], the private equity firms that control the Las Vegas-based casino company, will fund the bulk of the deal by contributing their stock in Caesars, which was estimated to be worth $954 million.

The bankrupt unit, Caesars Entertainment Operating Co Inc or CEOC, filed for bankruptcy in January 2015. Creditors have alleged that the parent company, Apollo and TPG stripped CEOC of its best casinos, leaving it unable to pay its $18 billion in debt.

An independent examiner said in March Caesars and its private equity backers could be on the hook for more than $5 billion in potential damages for the deals that preceded the bankruptcy.

CEOC and its junior bondholders have been battling over the amount the parent company, Apollo and TPG must contribute in exchange for releases from creditors claims.

Caesars had previously offered more than $4 billion, while junior creditors say they have claims worth $12.6 billion which they have been pursuing against the parent in New York and Delaware courts.

In Wednesday's deal, Caesars, its directors and officers and its private equity backers will contribute $1.2 billion. Most of that will be in Caesars stock along with more than $100 million in cash from insurance.   Continued...

The marquee sign at Caesars Palace hotel is seen on the strip in Las Vegas, Nevada, U.S. February 16, 2011.  REUTERS/Steve Marcus/File Photo