NEW YORK, Jan. 30, 2015 /PRNewswire/ -- Caesars
Entertainment Corporation ("CEC") and Caesars Entertainment
Operating Company, Inc., a majority owned subsidiary of CEC
("CEOC") engaged in confidential discussions with certain
beneficial holders (the "Bank Lenders") of first lien debt (the
"Bank Debt") incurred by CEOC pursuant to that certain Third
Amended and Restated Credit Agreement (the "Credit Agreement"),
dated as of July 25, 2014, by and
among CEC, CEOC, the lenders party thereto and Credit Suisse AG,
Cayman Islands Branch, as
administrative agent, regarding the Restructuring (as defined in
the Third Amended and Restated Restructuring Support and
Forbearance Agreement among CEC, CEOC and certain holders of claims
in respect of CEOC's 11.25% senior secured notes due 2017, CEOC's
8.5% senior secured notes due 2020 and CEOC's 9% senior secured
notes due 2020 (the "RSA")). The confidential discussions
took place at a meeting held on January 29,
2015 (the "Meeting"), however at this time, the Bank Lenders
have not been able to reach an agreement with CEC and CEOC.
At the Meeting, CEC and CEOC provided certain confidential
information (the "Discussion Materials") to the Bank Lenders
pursuant to non-disclosure agreements ("NDAs") among CEC, CEOC and
the Bank Lenders. The Discussion Materials have been posted
to the following URL:
http://origin-qps.onstreammedia.com/origin/multivu_archive/ENR/Bank-Response_vPresented.pdf
The Bank Lenders' NDAs with CEC and CEOC have now expired
pursuant to their terms and the information contained herein is
provided by the Bank Lenders in connection with their rights under
the NDAs. Any financial information contained in this press
release and posted to the URL above was provided by CEC and CEOC,
and the Bank Lenders make no representations or warranties
whatsoever with respect to such information, and disclaim any
responsibility of any kind to anyone for any use of, or reliance
on, this information or any omissions therefrom. The
information set forth herein and provided in the Discussion
Materials is subject to the disclaimer set forth at the end of this
press release. All capitalized terms used, but not defined
herein, shall have the meanings ascribed to such terms in the
RSA.
The Discussion Materials posted to the URL above convey CEC's
and CEOC's views, and describe some, but not all, of the terms
contained in a proposal previously provided by the Bank Lenders to
CEC and CEOC. Specifically, the Bank Lenders had included a
larger convertible note than that described in the Discussion
Materials for possible purchase by junior creditors, with the
proceeds from all convertible notes to be used to reduce debt at
OpCo, PropCo and CPLV.
During the Meeting, CEC and CEOC stated that pursuant to the
terms of the transaction described in the RSA, OpCo would use cash
from operations to first pay interest due on the New First Lien
OpCo Debt and New Second Lien OpCo Debt and then to pay the
obligations due under the Leases, including, without limitation, on
account of rent and capital expenditures.
In addition to the Discussion Materials, in the Meeting, CEC
proposed, in response to issues raised by the Bank Lenders and in
order to try to reach a consensual agreement with the Bank Lenders
(1) to amend the existing guarantee with respect to the amounts
outstanding under the Credit Agreement (the "CEC Credit Agreement
Guarantee") to guarantee (a) the New First Lien OpCo Debt and New
Second Lien OpCo Debt to be received by the Bank Lenders in the
Restructuring and (b) the CPLV Mezzanine Debt, if any, to be
received by the Bank Lenders and (2) an additional payment of
$19 million by CEC (for a total
payment of $300 million over twelve
months, or approximately 70% of the non-default contract rate of
interest on the Bank Debt, as compared to 80.7% over nine months as
expressed in the Discussion Materials) to the Bank Lenders to
settle any possible claims under the CEC Credit Agreement
Guarantee. In response, the Bank Lenders proposed that (x)
the guarantee described in clause (1) above be a payment guarantee
secured by all assets of the parent guarantor, (y) the Bank Lenders
receive their full non-default contractual rate of interest (as
opposed to their earlier request for default rate of interest) for
the full post-petition period from CEC (less the monthly adequate
protection payments at a rate equal to 1.5% per annum to be made to
the Bank Lenders pursuant to the terms of CEOC's cash collateral
order) with an upfront payment by CEC for forbearance from the
exercise of certain rights and remedies equal to the amount of
interest due for one quarter (the "Upfront Payment"), and (z) in
response to CEOC's rejection of certain structural protections to
the transaction provided for in the RSA that were requested by the
Bank Lenders to, in their view, ensure payment in full of the Bank
Debt, CEC make an additional payment of $294
million to the Bank Lenders at Exit to the extent that CEOC
was otherwise unable to syndicate the New First Lien PropCo Debt in
the market. In response, CEC offered a modified Upfront Payment of
$100 million, but otherwise, CEC and
CEOC rejected the Bank Lenders' proposals.
No assurances can be made that (a) a transaction as described
herein will be implemented or (b) any definitive agreements will be
reached between CEC, CEOC and the Bank Lenders. This
narrative summary should be read in conjunction with the Discussion
Materials posted to the URL above.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/ad-hoc-committee-of-first-lien-bank-lenders-of-caesars-entertainment-releases-information-about-restructuring-discussions-with-cec-and-ceoc-held-on-january-29-2015-300028690.html
SOURCE Ad Hoc Committee of First Lien Bank Lenders