Caesars Approved to End Bankruptcy After Two-Year Legal Slog
Two years and two days after putting its largest unit into bankruptcy, Caesars Entertainment Corp. won court approval of a restructuring plan that cancels $10.5 billion in debt and deals new owners into the gambling giant's equity stack.
Two years and two days after putting its largest unit into bankruptcy, Caesars Entertainment Corp. won court approval of a restructuring plan that cancels $10.5 billion in debt and deals new owners into the gambling giant's equity stack.
U.S. Bankruptcy Judge A. Benjamin Goldgar called the creditor agreement a "monumental achievement" while signing an order Tuesday in Chicago confirming the plan, setting Caesars Entertainment Operating Co. on the path out of Chapter 11. The company owns Harrah's Philadelphia in Chester, plus three Atlantic City properties: Caesars, Bally's, and Harrah's.
The process could still take months because gambling regulators must also accept the proposal, which calls for parent Caesars Entertainment to combine with publicly traded affiliate Caesars Acquisition Co.
When the reshuffling is done, possibly by August, Caesars will consist of two main parts. A real estate investment trust, to be owned by senior lenders, will hold the land underlying the casinos that were part of the bankrupt operating unit. That company will make money by renting the properties back to Caesars.
Caesars will own all of the gambling houses and property it did not put into bankruptcy as well as the gambling licenses for the bankrupt resorts. It will make money by operating the casinos. Junior creditors of Caesars Entertainment Operating Co. would own about 70 percent of the new Caesars. Current controlling shareholders including Apollo Global Management LLC and TPG Capital get the rest.
With the restructuring accomplished, Caesars will be positioned to make acquisitions again and to expand into new markets. The company is in the running to take over operations of the provincially run casinos in Ontario, while also pursuing new development opportunities in South Korea and Japan, as well as Atlanta.
There is even a glimmer of hope in one of Caesars' most troubled markets, Atlantic City, which enjoyed the first increase in casino revenue in 10 years in 2016. Caesars, the market leader there with three properties, has seen growth from its online gambling business in New Jersey, while the physical casino business has stabilized after years of losing gamblers to neighboring states.
