A deal among bankrupt Caesars Entertainment Operation Co. (CEOC) and its first-lien bank lenders has taken effect, a development that will likely smooth the gaming company’s path out of Chapter 11.
The Las Vegas casino operator on Wednesday (22 June) said the agreement took effect one day prior, according to an 8-K filing with the US Securities and Exchange Commission. The agreement, announced Tuesday, includes the repayment of $300 million to the first-lien lenders, an amount would be deducted from the $705 million in cash the first-lien lenders would get under the debtor’s reorganisation plan at a later date.
Among those financial firms that are party to the agreement include multiple FS Investment Corporation funds, which are sub-advised by Blackstone-owned GSO Capital Partners, and distressed investors Fortress Investment Group and Solus Alternative Asset Management, according the SEC filings.
CEOC, which filed for bankruptcy in January 2015 amid a staggering debt load from a 2008 LBO, was set to seek approval for its plan outline Wednesday.
Alongside the $705 million in cash, first-lien bank lenders would get additional cash of $882 million from a syndication of first-lien debt and an additional $406 million from the issuance of second-lien debt in a reorganised CEOC. The lenders would also receive new preferred shares in a new CEOC.
First-liens would also receive a $2 billion term loan to be issued by a newly formed real estate investment trust under which CEOC would transfer its business along with second-lien notes the REIT would issue if it cannot find $2.6 billion in financing for a first-lien mortgage for an unspecified property and a possible mezzanine loan.
Under the agreement, the first-lien lenders also agreed to support any possible reorganisation plan for currently non-bankrupt parent Caesars Entertainment Corp., if it must file for Chapter 11 to finish CEOC’s restructuring.
The first-lien bank lenders’ support comes after mediation talks broke down with creditors holding a portion of some