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Shares jump 45% on Caesars Entertainment's 3Q14 results

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Part 10
Shares jump 45% on Caesars Entertainment's 3Q14 results PART 10 OF 15

Reported bankruptcy filing for Caesars’ largest operating unit

Bankruptcy filing

Caesars Entertainment Corporation (CZR) was loaded with huge debt after Apollo Global Management LLC (APO) and TPG Capital took it private in 2008 in a leveraged buyout deal valued at $30.7 billion.

CZR is a part of the Consumer Discretionary Select Sector SPDR Fund (XLY) and the VanEck Vectors Gaming ETF (BJK).

Reportedly, the company’s in talks with creditors about its debt restructuring plan and a possible mid-January bankruptcy filing for its largest operating unit, Caesars Entertainment Operating Company (or CEOC). CZR’s debt has risen to considerable levels as it continues to burn through cash.

Reported bankruptcy filing for Caesars&#8217; largest operating unit

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On October 16, 2014, CEOC entered into certain control arrangements with a collateral agent in order to provide the first lien secured creditors with a lien on its cash. Such arrangements wouldn’t restrict CEOC’s ability to use cash and are not expected to have an operational impact on CEOC. According to Bloomberg, a transfer of assets, including a pledge on cash, needs to be done at least 90 days before a Chapter 11 filing for bankruptcy. The above chart shows a breakdown of CEOC’s total debt by maturity.

By setting a mid-January filing date, CZR has given enough time to its creditors. This would assure senior creditors could receive the cash as promised in October 2014. Also, this would prevent CZR from dealing with any disputes during a bankruptcy proceeding.

Creditors

Creditors involved in the discussions include Pacific Investment Management Co., Elliott Management Corp., Beach Point Capital Management LP, BlackRock, Inc. (BLK), Brigade Capital Management LLC, and JPMorgan Asset Management Inc.

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