Caesars Settles One Bondholder Lawsuit
August 17 2016 - 12:00PM
Dow Jones News
Caesars Entertainment Corp. has struck a deal to settle one of
several pending bondholder lawsuits, a key step toward peace in the
contentious bankruptcy case of the casino company's largest
operating unit.
The settlement, which Caesars disclosed Wednesday in a filing
with the Securities and Exchange Commission, resolves a
class-action lawsuit brought by the holders of unsecured bond debt
issued by its Caesars Entertainment Operating Co. unit. Like other
litigation pending against Caesars, the lawsuit sought to hold
Caesars to guarantees of the bankrupt CEOC unit's debt.
Under the settlement, which was reached Monday, lead plaintiff
Frederick Barton Danner agreed to drop the lawsuit in a New York
federal court and to support CEOC's chapter 11 restructuring, which
includes a broader settlement of potential legal claims against
Caesars and its private-equity backers, Apollo Global Management
and TPG.
In return, CEOC will pay the fees of Mr. Danner's lawyers and
will provide unsecured bondholders who vote in favor of its
restructuring plan with extra cash equal to at least 6.38% of the
bond debt they hold.
A lawyer for Mr. Danner couldn't immediately be reached for
comment Wednesday, and a Caesars spokesman declined comment beyond
the regulatory filing.
Mr. Danner sued Caesars in the U.S. District Court in Manhattan
in October 2014, several months before CEOC sought chapter 11
protection. The class-action suit claimed an August 2014 financing
transaction was improperly designed to release Caesars of its
guarantee of $750 million in unsecured debt due 2016. The suit
alleged that the deal was done without bondholders' consent,
violating their rights under the Trust Indenture Act.
Caesars has said that transaction, and others targeted in
similar lawsuits brought by holders of various CEOC bond debt, was
proper and necessary to shore up its troubled operating unit.
Caesars still faces several other bondholder lawsuits in federal
court in New York, and one in a Delaware state court, over billions
of dollars' worth of CEOC debt guarantees. By bankruptcy-court
order, however, those lawsuits are on hold until Aug. 29, although
CEOC is seeking an extension of the lawsuit shield now protecting
its parent.
Since filing for chapter 11 protection in January 2015, CEOC has
sought a broad settlement with its creditors and its parent, which
the bondholder litigation has complicated. At issue are a series of
prebankruptcy financing deals and asset transfers. Bondholders and
CEOC each say they have legal claims against Caesars, Apollo and
TPG in connection with the deals, which they allege were designed
to protect CEOC's owners at the expense of its creditors. Caesars
and its owners dispute the allegations.
Write to Jacqueline Palank at jacqueline.palank@wsj.com
(END) Dow Jones Newswires
August 17, 2016 11:45 ET (15:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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