Caesars to refinance $4.4bn CMBS facilities

The hotel and gaming company, a portfolio company of TPG and Apollo, carried $23.6bn in total debt as of 30 June. 

Caesars Entertainment has initiated a refinancing process for $4.4 billion of outstanding CMBS loans, according to an announcement filed with the US Securities and Exchange Commission Wednesday.

To finance the repurchase of its outstanding CMBS facilities – which include outstanding mortgage loans and mezzanine loans – Caesars will syndicate of $3.27 billion of new senior secured credit facilities which will include a $3 billion term loan facility and a $269.5 million revolving credit facility. The company also intends to offer $500 million of first lien notes and $1.3 billion of second lien notes.

Terms of the new facilities are not available at this time, a Caesars spokesperson told Private Debt Investor.

The repurchase agreement would allow Caesars to pay 100 percent of the aggregate principal of the mortgage loans at a price of $0.99 per $1.00 of principal plus accrued and unpaid interest. Mezzanine loans will be purchased at a price of $0.90 per $1.00 of principal plus accrued and unpaid interest.  

The new facilities will also help Caesars refinance the $450 million senior secured credit facility belonging to its subsidiary, Octavius Linq Holding.

The CMBS repurchase requires approval from lenders who hold at least 65 percent of the outstanding aggregate principal amount of the mortgage loans and 85 percent of the outstanding aggregate principal amount of the mezzanine loans. As of 17 September, lenders holding 63 percent of the mortgage loans and 84 percent of the outstanding mezzanine loans had accepted, according to the filing.

Lenders “have agreed, under certain circumstances, to initiate the buy-sell mechanisms under the CMBS Facilities to purchase for cash outstanding loans held by lenders who do not accept the Existing CMBS Borrowers’ offer,” according to the SEC filing.  

Apollo Global Management and TPG took Caesars private in a $30.7 billion deal in 2008. The company’s core gaming and entertainment business suffered during the global financial crisis, and Caesars carried more than $23 billion in total debt as of 30 June – including CMBS financing – according to a second quarter report.  

The company’s net revenues fell by $68.6 million for the six months ending 30 June compared to the prior year due mainly to a $246.7 million decrease in casino revenues. That decline was largely offset by increases in non-gaming revenues, coupled with lower promotional allowances, according to the earnings report.

In April, Caesars announced that Apollo and TPG would invest $250 million each into a growth-oriented venture called Caesars Growth Partners intended to help company pursue growth opportunities through a “less levered and more flexible vehicle than its existing operating subsidiaries”, the company said in the statement.

“The transaction is an important step in our ongoing efforts to improve the company’s balance sheet and position ourselves to make strategic investments,” Gary Loveman, chairman, president and chief executive officer of Caesars said in a statement.