Casino operator Caesars Entertainment has reached a deal with the last remaining bondholder blocking the company’s interminably delayed proposed restructuring.
On Tuesday, Caesars announced that hedge fund Trilogy Capital Management had agreed to support the plan to restructure Caesar’s bankrupt main unit Caesars Entertainment Operating Co (CEOC). Neither firm saw fit to disclose what goodies Caesars dangled to convince Trilogy to flip its script.
Trilogy, which held only $9.4m of CEOC’s $18.4b of debt, had mounted a surprise last-minute assault on the deal Caesars had reached with its other junior creditors, a deal that had taken nearly two years to negotiate. Caesars was forced to extend its stated deadline last week to continue efforts to try to bring Trilogy on board.
The Trilogy deal now leaves just one more niggling obstacle to CEOC’s restructuring, which will see the company split into a casino management firm and a real estate investment trust, The company is still fighting with the National Retirement Fund over CEOC employee pensions, but Caesars bankruptcy lawyers claim they’re close to resolving this issue.
While CEOC’s path back to solvency appears set, the restructuring must be approved by the federal bankruptcy watchdog. But a US Trustee attorney suggested last week that winning that approval wasn’t necessarily a slam dunk.
In exchange for Caesars upping its repayment offer to something approximating adequate, junior creditors were required to forego their lawsuits against the parent company and absolve the parent of further responsibility for CEOC’s debts.
It’s this legal absolution that isn’t sitting right with the feds. In a filing with the Chicago bankruptcy court, US Trustee attorney Denise Delaurent said that, from the department’s perspective, “even if everyone comes to an agreement, it might still violate the law.”
