Caesars wraps up $18 billion bankruptcy case, eyes future

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By Tracy Rucinski | CHICAGO

CHICAGO Caesars Entertainment Corp has
wrapped up the $18 billion bankruptcy of its main operating
unit, allowing the casino company to focus on restoring the
tarnished Harrah’s, Caesars and Horseshoe brands after two years
of Chapter 11 proceedings.

Caesars’ subsidiary, Caesars Entertainment Operating Co Inc
(CEOC), won court approval on Tuesday for a plan to shed $10
billion of debt and separate its U.S.-based property assets from
its gaming operations.

The company expects to emerge from bankruptcy later this

“Upon CEOC’s emergence, we will be positioned to strengthen
our financial and operational performance by pursuing new
opportunities to invest in and expand our brands and business,”
Mark Frissora, president and chief executive officer of Caesars
Entertainment, said in a statement.

As part of the reorganization plan, Caesars Entertainment –
formed from the 2008 buyout of Harrah’s – will merge with
another subsidiary, Caesars Acquisition Co, with a view
to regrouping its casinos and hotels under one roof.

The new Caesars group will compete with gaming companies
such as MGM Resorts International, Wynn Resorts Ltd and Las Vegas Sands Corp, each with a heavy
presence on the Las Vegas Strip.

Analysts said they expect the new group’s leverage to be on
the high end versus its peers but said it was better positioned
to attract new business from millennials to offset an expected
slowdown in its traditional slot machine business as baby
boomers retire.

“Caesars has been one of the pioneers in that respect,” said
Gaming Union analyst John DeCree. “The biggest challenge is
going to be getting the new structure under control.”

The Caesars reorganization plan is subject to certain gaming
regulatory approval and financing transactions, as well as the
completion of the parent’s merger with Caesars Acquisition.

Caesars struck a $5 billion settlement in September to end
the bankruptcy, which had pitted aggressive and deep-pocketed
creditors against private equity sponsors Apollo Global
Management and TPG Capital Management LP.

It overcame a final objection from the U.S. Trustee, a U.S.
bankruptcy watchdog, last week by modifying certain legal
protections granted under the plan.

“It is a monumental achievement,” U.S. Bankruptcy Judge
Benjamin Goldgar said at the confirmation hearing in Chicago.

Apollo and TPG are to retain a 16 percent collective stake
in the new Caesars, which will be controlled by creditors, but
will not own any equity in the real estate investment trust that
will house the property assets.

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