Caesars Entertainment to File for Bankruptcy

Casino and entertainment company Caesars Entertainment Corp will be filing for bankruptcy next month in an attempt to cut its growing debt.
Caesars signed what is known as a lock-up agreement with its bondholders on Friday, consenting to place its greatest unit, Caesars Entertainment Operating Co (CEOC), into Chapter 11 bankruptcy in mid-January—by January 15 at the latest.
The proposed filing for Chapter 11 bankruptcy protection will decrease Caesar’s current debt of $18.4 billion to roughly $8.6 billion, according to the company.
On Monday, Caesars Entertainment Corp announced it will acquire affiliate Caesars Acquisition Co in an all-stock agreement. This procurement will allow the company to restructure its $18.4 billion debt without seeking outside financing.
Other portions of the Las-Vegas based company, Caesars Entertainment, Caesars Entertainment Resort Properties and Caesars Growth Partners, will not be included in the bankruptcy process, according to CEOC.
One term of the lock-up agreement is that a particular percentage of first-lien bondholders must sign the contract before Caesars is prepared to file bankruptcy papers. Caesars must receive approval from other senior creditors in order to meet voting requirements to approve a bankruptcy plan before a judge can approve
CEOC plans to divide its U.S.-based enterprises into two separate companies: an operating firm and a publicly traded real estate investment trust that will maintain a recently formed property company.
By splitting the aforementioned assets, CEOC will cut its annual interest expense by 75 percent.
Caesars was weighed down with debt after the company was made private for $30.7 by Apollo Global Management LLC and TPG Capital in 2008. The deal occurred before the credit crisis and part of a buyout; Caesar’s has lost money every year since 2009.
Friday’s closing price for Caesars Entertainment was $1.22 billion, or $8.96 per share.