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Caesars Entertainment Announces Steps in Restructuring

October 08, 2015, 07:31 AM
Filed Under: Bankruptcy

Caesars Entertainment Operating Company, Inc. ("CEOC"), has filed an Amended Plan of Reorganization (the "Amended Plan"), an accompanying Disclosure Statement (the "Disclosure Statement") and a motion to further extend exclusivity through March 15, 2016. The filings were made with the United States Bankruptcy Court for the Northern District of Illinois.

The Amended Plan provides for a comprehensive restructuring transaction that is supported by holders of more than 80 percent of CEOC's First Lien Bank Debt and First Lien Notes pursuant to restructuring support agreements CEOC has entered into with both creditor groups.  Importantly, the Amended Plan also provides for enhanced recoveries to CEOC's junior creditors.

Now that CEOC has obtained the support of approximately $12 billion (or two-thirds) of its capital structure, it can continue its ongoing efforts to seek consensus with its junior creditors while also pursuing a path to emergence consistent with agreed upon milestones.  CEOC is not seeking a hearing to approve the Disclosure Statement and solicit votes on the Amended Plan at this time.  Under an existing court order related to the ongoing investigation by the court-appointed Chapter 11 examiner, the earliest CEOC can request a hearing to approve the Disclosure Statement is December 15. The extension sought will provide CEOC additional time to pursue its Amended Plan on an exclusive basis while it seeks to build further consensus for the Amended Plan.

Strong Operations

CEOC noted that its operations have continued uninterrupted throughout the financial restructuring process and that its business performance improved in the first half of 2015 compared with the prior year, driven by, among other factors, marketing, labor efficiencies and strong hospitality revenues.

Highlights of the Amended Plan

If confirmed and consummated, the Amended Plan, which settles litigation claims for significant contributions of cash and securities from Caesars Entertainment Corporation ("Caesars Entertainment") and improves recoveries across CEOC's capital structure, will eliminate approximately $10 billion in aggregate debt from CEOC's balance sheet. Specifically, the Amended Plan provides for a tax-efficient corporate and balance sheet restructuring that maximizes the value of the businesses by converting CEOC into a real estate investment trust (REIT) with ongoing credit support from Caesars Entertainment. The Amended Plan also outlines recoveries for creditors that are materially improved from the original Plan of Reorganization.

The Disclosure Statement is subject to approval by the Bankruptcy Court and the Amended Plan is subject to confirmation by the Bankruptcy Court.  The filings made today will set in motion a series of hearings before the Bankruptcy Court to be scheduled in due course.  This press release is not intended as a solicitation for a vote on the Amended Plan within the meaning of section 1125 of the Bankruptcy Code.

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