LAS VEGAS, Sept. 27, 2016 /PRNewswire/ -- Caesars
Entertainment Corporation (NASDAQ: CZR) ("Caesars
Entertainment") and Caesars Entertainment Operating Company,
Inc. ("CEOC") and its Chapter 11 debtor subsidiaries
(collectively, the "Debtors") today announced that they have
received confirmation from representatives of CEOC's major creditor
groups of those groups' support for a term sheet that describes the
key economic terms of a proposed consensual chapter 11 plan for the
Debtors. Based on discussions with these representatives,
Caesars Entertainment and CEOC are optimistic that the support
received for the proposed consensual plan will allow CEOC to obtain
the required creditor votes to confirm the plan. Confirmation of
the plan would facilitate a successful conclusion to CEOC's
bankruptcy proceedings in 2017 and enable Caesars Entertainment and
CEOC to move forward with a substantially improved capital
structure.
The parties are working on the definitive support agreements and
amendments to CEOC's existing plan of reorganization that will
adopt and implement the terms outlined in the term sheet and
certain other terms agreed to among the parties' representatives
(the "Revised Plan of Reorganization").
Representatives of the Ad Hoc groups of the First Lien Bank
Lenders, the First Lien Noteholders, and Subsidiary Guarantee
Noteholders, as well as the Official Committee of Second Lien
Noteholders, have confirmed those creditors' support for the term
sheet, subject to the negotiation of and entry into definitive
support agreements, and the Revised Plan of Reorganization to
implement the agreed upon terms. Through its existing restructuring
and support agreement, the Unsecured Creditors Committee will also
benefit from the terms described in the term sheet. The
term sheet contemplates that all litigation among these major
creditor constituencies, Caesars Entertainment and the Debtors will
be stayed voluntarily. Assuming a Revised Plan of Reorganization is
agreed upon, it is expected the voluntary stays would continue.
Hamlet Holdings, the entity through which funds managed by
Apollo Global Management, LLC, TPG Capital, L.P. and certain
co-investors (collectively, "Hamlet") hold their interest in
Caesars Entertainment, will contribute the full 14% of the equity
that it would have received through its ownership in Caesars
Entertainment in the plan of reorganization currently on file. This
contribution is valued by the Debtors at approximately $950 million. Notwithstanding the fact that
Hamlet will contribute all of its equity in Caesars Entertainment,
the public stockholders of Caesars Entertainment will
retain 6% of the equity in "New CEC." The Revised Plan
of Reorganization will release all pending and potential litigation
claims and causes of action against Caesars Entertainment, Caesars
Acquisition Company, and related third parties to the fullest
extent permitted.
As a result of the Revised Plan of Reorganization, relying upon
the valuation contained in the most recent disclosure statement
filed by CEOC, creditors would receive the following
recoveries:
- First Lien Bank Lender recoveries will be approximately
115 cents on the dollar, a decline of
approximately 1 cent from the
previous plan on a pro rata basis due to a $66 million reduction in cash distributed under
the plan;
- First Lien Noteholder recoveries will remain at approximately
109 cents on the dollar. In
exchange for, among other things, a fixed cash payment of
$142 million, the First Lien
Noteholders will waive their right to certain excess cash to be
paid pursuant to a separate court order, resulting in a
$79 million net reduction in cash
based on CEOC projections;
- Second Lien Noteholder recoveries will be approximately
66 cents on the dollar, an increase
of approximately 27 cents from the
previous plan on a pro rata basis due to $345 million of cash, a 14.6% increase in fully
diluted equity in "New CEC" (the surviving entity in the planned
merger of Caesars Entertainment and Caesars Acquisition), and a
$108 million increase in convertible
notes in "New CEC";
- Subsidiary Guaranteed Noteholder recoveries will be
approximately 83 cents on the dollar,
a decline of approximately 1 cent on
a pro rata basis due to a less than 0.1% reduction in fully diluted
equity in "New CEC" to be distributed under the plan; and
- Unsecured creditors will receive an increase in recoveries to
approximately 66 cents on the dollar,
consisting of a combination of cash, an increase in the amount of
fully diluted equity in "New CEC" allocated to unsecured creditors,
and an increased allocation of convertible notes in "New CEC".
Under the Revised Plan of Reorganization and based on the
current exchange ratio in the pending merger agreement between
Caesars Entertainment and Caesars Acquisition (which is subject to
adjustment in certain cases), CEOC creditors would own
approximately 70% of the fully diluted equity1 in "New
CEC." Shareholders of Caesars Acquisition would own approximately
24%.
The definitive support agreements, if and when agreed, will
include various conditions to their continued effectiveness. The
Revised Plan of Reorganization, when agreed and filed with the
Bankruptcy Court, will be subject to a formal creditor vote and
confirmation by the Bankruptcy Court. The completion of CEOC's
restructuring under the Revised Plan of Reorganization will be
subject to numerous conditions, including regulatory approval,
completion of definitive documentation implementing the Revised
Plan of Reorganization and the consummation of the merger between
Caesars Entertainment and Caesars Acquisition.
In addition, Caesars Entertainment and the Debtors have
consensus with certain holders of CEOC's First Lien notes to amend
certain of the covenants in the proposed master lease and support
agreement relating to OpCo's lease obligations to PropCo to provide
for certain restrictions on dividends and similar distributions at
"New CEC" for a period of six years. Such amendments will be
reflected in amended documents to be filed in connection with the
Revised Plan of Reorganization. The support of the First Lien
Noteholders for the term sheet is also conditioned upon an
acceptable resolution of certain tax issues.
The term sheet can be found in the Form 8-K that will be filed
with the Securities and Exchange Commission and also available in
the Media Resources section of the CEOC Restructuring website at
http://www.ceocrestructuring.com/media-resources/.
About Caesars Entertainment Corporation
Caesars
Entertainment Corporation (CEC) is the world's most diversified
casino-entertainment provider and the most geographically diverse
U.S. casino-entertainment company. CEC is mainly comprised of the
following three entities: the majority owned operating subsidiary
Caesars Entertainment Operating Company, wholly owned Caesars
Entertainment Resort Properties and Caesars Growth Properties, in
which we hold a variable economic interest. Since its beginning in
Reno, Nevada, 75 years ago, CEC
has grown through development of new resorts, expansions and
acquisitions and its portfolio of subsidiaries now operate 47
casinos in 13 U.S. states and five countries. The Company's resorts
operate primarily under the Caesars®, Harrah's® and Horseshoe®
brand names. CEC's portfolio also includes the London Clubs
International family of casinos. CEC is focused on building loyalty
and value with its guests through a unique combination of great
service, excellent products, unsurpassed distribution, operational
excellence and technology leadership. The Company is committed to
environmental sustainability and energy conservation and recognizes
the importance of being a responsible steward of the environment.
For more information, please visit www.caesars.com.
Forward Looking Statement
This release includes "forward-looking statements" intended to
qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. You can identify
these statements by the fact that they do not relate strictly to
historical or current facts. These statements contain words such
as, "will", "would", "expected", "proposed", and "working on" or
the negative or other variations thereof or comparable terminology.
In particular, they include statements relating to, among other
things, the consensus reached with representatives of CEOC's major
creditor constituencies, future actions that may be taken by
Caesars and others with respect thereto, consummation of a
consensual restructuring of the Debtors and the estimated future
relative shareholding of New CEC. These forward-looking
statements are based on current expectations and projections about
future events.
You are cautioned that forward-looking statements are not
guarantees of future performance or results and involve risks and
uncertainties that cannot be predicted or quantified and,
consequently, the actual performance of CEC may differ materially
from those expressed or implied by such forward-looking statements.
Such risks and uncertainties include, but are not limited to, the
following factors, as well as other factors described from time to
time in our reports filed with the Securities and Exchange:
CEC's ability (or inability) to reach formal agreement with CEOC's
major creditor constituencies regarding new or amended
restructuring support agreements and a Revised Plan of
Reorganization, CEC's and CEOC's ability (or inability) to
meet any milestones or other conditions set forth in any such new
or amended restructuring support agreements, CEC's and CEOC's
ability (or inability) to satisfy the conditions to consummation of
any consensual restructuring of the Debtors (including without
limitation receipt of requisite approvals of creditor groups, the
Bankruptcy Court and regulators), CEC's ability (or inability) to
secure additional liquidity to meet its ongoing obligations and its
commitments to support the CEOC restructuring as necessary, CEC's
financial obligations exceeding or becoming due earlier than what
is currently forecast and other risks associated with the CEOC
restructuring and related litigation.
1 Fully diluted equity does not include stock
buybacks that creditors may elect pursuant to the Revised Plan of
Reorganization.
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SOURCE Caesars Entertainment Corporation