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Caesars Entertainment Debt Holders Could Recover Their Investment

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Senior secured facilities recovery

On December 28, 2014, Caesars Entertainment’s (CZR) entered into an agreement with the creditors of Caesars Entertainment Operating Company (or CEOC), a majority owned subsidiary of CZR, to restructure CEOC’s debt. These creditors of CEOC could recover their investment through a combination of cash and new debt issuances of the restructured entity.

Each lender under CEOC’s senior secured credit facilities will receive its pro rata share of:

  • $705 million in cash
  • $883 million in new first lien operating company debt
  • $406 million of new second lien operating company debt
  • $1,961 million in new first lien property company debt
  • up to $1,450 million in additional cash or CPLV mezzanine debt
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First lien notes

Each first lien note holder will receive a pro rata share of:

  • $413 million in cash
  • $306 million in new first lien operating company debt
  • $141 million of new second lien operating company debt
  • $431 million in new first lien property company debt
  • $1,425 million in new second lien property company debt
  • up to $1,150 million in additional cash or CPLV mezzanine debt
  • 9% directly or indirectly of property company equity (or cash under put options and equity rights)
  • 100% of the operating company equity (or cash under put options and equity rights)

Caesars’s responsibility

In order to effectuate the restructuring, CZR has agreed to:

  • contribute $406 million to CEOC with an additional $75 million if there’s insufficient liquidity at closing
  • purchase up to all of the operating company’s equity for $700 million and 14.8% of the property company’s equity for $269 million
  • guarantee the operating company’s monetary obligations to the property company under the leases

CZR is a component of ETFs including VanEck Vectors Gaming (BJK). BJK invests in major casino companies like Las Vegas Sands (LVS), Wynn Resorts (WYNN), and MGM Resorts (MGM).

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