Apollo, TPG offered to help bankroll Caesar’s restructuring

The revelation comes shortly after reports that the Chicago bankruptcy judge overseeing the case suggested the two investment firms should help fund the gaming giant’s restructuring. 

Apollo Global Management and TPG Capital offered to contribute $250 million in August as part of the restructuring of gaming behemoth Caesars Entertainment Operating Company (CEOC) before settlement talks ceased, according to court documents.

Apollo's Marc Rowan and David Sambur recounted in a Wednesday (7 September) filing with the Chicago bankruptcy court that their firm and TPG, both of which acquired Caesars in a massive $30.7 billion 2008 leveraged buyout, had offered to help fund the reorganisation plan. The contribution would have been alongside additional contributions from third parties.

At a 16 August meeting, former mediator and federal bankruptcy judge Joseph Farnan asked whether TPG and Apollo would “fund up to $250 million to reach a ‘best and final’ deal” for a 58 percent recovery for the debtor’s second lien noteholders. CEOC’s creditors and other parties, including Caesars Entertainment Corporation (CEC), the nonbankrupt parent of CEOC, were party to the negotiations.

“Judge Farnan was advised that the sponsors would provide the incremental funding,” court papers read. “Nonetheless, the mediation ended without agreement and, having received no further proposal from the [official committee of second priority noteholders], CEC was left with the clear understanding that the gap between the parties was several times $250 million.”

The disclosure comes after Judge Benjamin Goldgar, who is overseeing the Chapter 11 case, reportedly said the investment firms should ante up and put some money into the restructuring pot. The disclosure also came shortly before Farnan resigned on Friday saying the court’s paradigm of the mediation process did not align with his own views.

CEOC won approval for its plan outline in June, setting it up for a confirmation hearing in January where it would seek the final OK for its reorganisation plan before the gaming magnate can exit Chapter 11. Creditors include FS Investment Corporation, the Franklin Square business development company sub-advised by GSO Capital Partners.