\nSept. 3 (Bloomberg) \u2014 A group of Caesars Entertainment Corp.\u2019s junior bondholders sued the company over what they called a \u201cbackroom deal\u201d with another group of creditors, opening a third front in the widening court battle over the casino operator\u2019s future.<\/p>\n
\tInvestors in the notes, including funds linked to MeehanCombs LP, Trilogy Capital Management LLC and Chicago Fundamental Investment Partners LLC, accused the Las Vegas-based company of paying the other group, which holds the same bonds, \u201ca vast premium\u201d over the market rate in exchange for a deal that makes their own investment \u201ceffectively worthless.\u201d<\/p>\n
\t\u201cCaesars has engaged in a series of transactions to circumvent its obligations under the notes, indentures and guarantees and to effectively eviscerate plaintiffs\u2019 unconditional right to receive principal and interest,\u201d the investors claimed in a complaint filed today in Manhattan federal court.<\/p>\n
\tCaesars\u2019 effort to reshuffle debt drew criticism from noteholders after the largest owner of casinos in the U.S. sought to remove guarantees on much of its $23 billion in debt, in preparation for a wider reorganization. Talks with investors challenging efforts to restructure $12.7 billion in debt spilled into two courts last month. The company claimed hedge funds want to force a default, while bondholders said Caesars is squandering assets.
\n\tAbandoning Guarantees
\n\tThe investors who sued today own about $21 million of the company\u2019s 6.5 percent notes due in 2016 and its 5.75 percent debt due 2017. They attacked Caesars\u2019 alleged effort to amend the bond indentures and restructure the notes within six months. In the complaint, they called the plan part of a strategy to restructure Caesars\u2019 operating unit debt \u201cby transferring out valuable assets and abandoning CEC\u2019s guarantees on the debt, and to leave the disenfranchised noteholders out in the cold.\u201d<\/p>\n
\tStephen Cohen, a spokesman for Caesars at Teneo Holdings LLC, said the lawsuit by junior bondholders has \u201cno merit.\u201d<\/p>\n
\tThe operating company\u2019s $159 million of 6.5 percent unsecured notes due June 2016 fell less than a cent to trade at 34.4 cents on the dollar at 4:28 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority..<\/p>\n
\tThe notes traded at 64 cents before Caesars announced Aug. 12 it reached a deal to pay down some of the notes, according to Trace data.
\n\tLargest Unit
\n\tIn May, Caesars sold a 5 percent stake in Caesars Entertainment Operating Co., its largest unit, to undisclosed investors. The sale meant some bond investors will no longer hold a claim to the parent company\u2019s assets, leaving them with less bargaining power in talks over the debt.<\/p>\n
\tWilmington Savings Fund Society, a trustee for holders of some of Caesars 10 percent notes due in 2018, accused the casino operator of fraudulently transferring assets as part of the restructuring and wasting assets, according to a complaint filed Aug. 5 in Delaware Chancery court in Wilmington.<\/p>\n
\tThe operating company was insolvent at the time Caesars forced it to give up some of its most valuable assets, making the transfer an intentional fraud inflicted on creditors, according to the trustee\u2019s complaint.<\/p>\n
\tThe same day, Caesars sued more than 30 bondholders in New York state court in Manhattan, including funds overseen by Appaloosa Management LP, Oaktree Capital Group Holdings LP and Elliott Management Corp. Caesars claimed the companies sought to impede its restructuring with \u201cdisruptive appearances before gaming regulators\u201d and \u201ca baseless default notice.\u201d
\n\tLatest Lawsuit
\n\tAccording to the latest bondholder lawsuit, Caesars agreed to repurchase $155.4 million of notes as long as their holders assented to the removal of a guarantee by the parent company \u2014 a move that would apply to notes held by investors not privy to the deal. The agreement also required participating debtholders to approve a future restructuring of the operating company\u2019s debt, according to court papers.<\/p>\n
\tThe company, and Caesars Entertainment Operating Co., which issued the debt, \u201crejected the fair and inclusive path where an issuer makes an offer available to all note holders in favor of cutting its separate deal with the select few,\u201d according to the complaint.
\n\tUnspecified Damages
\n\tThe group, earlier represented by O\u2019Brien LLP, sent Caesars a letter Aug. 15 demanding it provide documents that were used to negotiate the transaction. The investors are seeking unspecified damages and an order from the court declaring the changes to the bond indentures invalid.<\/p>\n
\t\u201cCaesars has violated federal law and certain provisions of the indenture and we intend to pursue our rights,\u201d James Millar, a partner at Drinker Biddle & Reath LLP, who represents the group, said in an interview.<\/p>\n
\tThe case is MeehanCombs Global Credit Opportunities Master Fund LP, 14-CV-07091, U.S. District Court, Southern District of New York (Manhattan).
\n\t\u2013With assistance from Christopher Palmeri in Los Angeles.<\/p>\n
Posted by:<\/strong> Chuco on September 5, 2014, 2:25 am<\/p>\n Posted by:<\/strong> Dr Crapology on September 5, 2014, 1:16 pm<\/p>\n \tDoc<\/p><\/div>\n<\/div>\n Posted by:<\/strong> Pit Boss on September 8, 2014, 3:52 pm<\/p>\n Sept. 3 (Bloomberg) \u2014 A group of Caesars Entertainment Corp.\u2019s junior bondholders sued the company over what they called a \u201cbackroom deal\u201d with another group of creditors, opening a third front in the widening court battle over the casino operator\u2019s…<\/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-7970","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\/7970","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=7970"}],"version-history":[{"count":0,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/7970\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/media?parent=7970"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/categories?post=7970"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/tags?post=7970"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}