\nChristopher Palmeri and Charles Mead, Bloomberg \u00b7 <\/p>\n
\tJune 7 (Bloomberg) \u2014 Bondholders sent a unit of Caesars Entertainment Corp. a notice of default, intensifying a battle with the largest owner of casinos in the U.S.<\/p>\n
\tThe notice was sent June 5 by investors owning at least 30 percent of Caesars Entertainment Operating Co. second-lien, 10 percent bonds due in 2018, according to a filing by Caesars yesterday. The creditors said the company defaulted on its obligations by transferring assets, such as Bally\u2019s Las Vegas hotel, to an affiliate, and by removing the parent company\u2019s guarantee on the operating unit\u2019s debt. There are $3.7 billion of the notes outstanding, according to a filing.<\/p>\n
\tThe notice escalates the conflict between Las Vegas-based Caesars, purchased in a 2008 buyout by Apollo Global Management LLC and TPG Capital, and some of its creditors. The company, which has $23.4 billion in debt outstanding, said the asset transfers followed a rigorous, independent process designed to provide liquidity crucial to its business.<\/p>\n
\t\u201cWe will not allow our company, our employees and the communities in which we operate to be held hostage by a minority of holders whose interests are contrary to the long-term health of the company,\u201d Gary Loveman, chairman and chief executive officer of Caesars, said in the filing.<\/p>\n
\tThe creditors\u2019 action puts Caesars on notice that, if their concerns aren\u2019t addressed, they could seek to exercise remedies under the loan documents, according to Brett Axelrod, co-chair of the financial restructuring practice at Fox Rothschild LLP in Las Vegas. Depending on the voting thresholds in the documents, the bondholders could file for receivership, file an involuntary bankruptcy proceeding or foreclose, she said.<\/p>\n
\tSecond-Lien Holders<\/p>\n
\t\u201cAlthough the indenture allows 30 percent of the holders of a relevant issue to give notice of defaults, the notice delivered yesterday was given by holders of more than 50 percent of the largest issue of Caesars Entertainment Operating Co. second-lien notes,\u201d Bruce Bennett, an attorney for the bondholders at Jones Day in Los Angeles, said in a June 6 statement.<\/p>\n
\tCaesars is one of the biggest casino operators on the Las Vegas Strip, and the largest in Atlantic City, New Jersey, where it has entered the new online gambling market. The company has been adding amenities, including a Ferris Wheel and a mall, in Las Vegas and renovating some of its hotels there.<\/p>\n
\tAt the same time, the company has bought back, refinanced and extended debt maturities while shifting assets into entities with less debt, including Caesars Growth Partners LLC.<\/p>\n
\tShares Drop<\/p>\n
\tCaesars last month sold a 5 percent stake in Caesars Entertainment Operating Co., its largest and most-indebted subsidiary, to outside investors for $6 million. The company said that gave it the ability to remove a guarantee to bondholders on the parent company\u2019s assets, a move analysts said weakens creditors\u2019 negotiating power in a restructuring.<\/p>\n
\tCaesars, based in Las Vegas, fell 3 percent to $17.91 yesterday in New York. The stock has fallen 17 percent this year.<\/p>\n
\tThe operating unit\u2019s 10 percent, second-lien debt traded at 42.5 cents on the dollar yesterday in New York, prior to the filing, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. That price was unchanged from June 5. The unit\u2019s $1.5 billion of 9 percent, first-lien bonds dropped 0.5 cent on the dollar to 84 cents, according to Trace.<\/p>\n
\tThe filing named 13 investors, including Appaloosa Management LP, Oaktree Capital Group LLC, Canyon Capital Advisors LLC, Caspian Capital LP and Contrarian Capital Management LLC, according to a person familiar with the document who was not authorized speak publicly.<\/p>\n
\tFighting Back<\/p>\n
\tAndrea Williams, a spokeswoman at Los Angeles-based Oaktree, declined to comment, as did Nazan Riahei, who represents Canyon at Brunswick Group. Calls to Appaloosa, Caspian and Contrarian weren\u2019t returned.<\/p>\n
\tTeri Charest, a spokeswoman for U.S. Bancorp, whose US Bank NA unit acts as a trustee for Caesars\u2019 bonds, declined to comment via e-mail.<\/p>\n
\tThe creditors\u2019 move also creates a risk to bondholders that Caesars withholds interest payments on the 10 percent notes and files for bankruptcy, according to Barbara Cappaert, an analyst at KDP Investment Advisors Inc.<\/p>\n
\t\u201cBondholders are fighting back with whatever they can in order to better position themselves in an inevitable debt restructuring,\u201d Cappaert wrote in a report. \u201cClearly the wheels are in motion for restructuring talks, even if they are starting out on a contentious note.\u201d<\/p>\n
No replies were posted for this topic.<\/p>\n","protected":false},"excerpt":{"rendered":"
Christopher Palmeri and Charles Mead, Bloomberg \u00b7 June 7 (Bloomberg) \u2014 Bondholders sent a unit of Caesars Entertainment Corp. a notice of default, intensifying a battle with the largest owner of casinos in the U.S. The notice was sent June…<\/p>\n","protected":false},"author":36,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-7499","post","type-post","status-publish","format-standard","hentry","category-latest-casino-news"],"_links":{"self":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/7499","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/comments?post=7499"}],"version-history":[{"count":0,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/7499\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/media?parent=7499"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/categories?post=7499"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/tags?post=7499"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}