Caesars Entertainment’s (CZR) operating unit, Caesars Entertainment Operating Company (or CEOC), will restructure as a separate operating company (or OpCo) and property company (or PropCo), with a real estate investment trust (or REIT) directly or indirectly owning and controlling the PropCo. The PropCo will own all of CEOC’s real property. A separate subsidiary of PropCo will own all of the assets of Caesars Palace Las Vegas (or CPLV).
The OpCo will issue up to $1,188 million in principal amounts of first lien debt with a six-year term and interest at the London interbank offered rate (or LIBOR) plus 4.00% with a 1% LIBOR floor.
The OpCo will issue up to $547 million in principal amounts of second lien debt with a seven-year term and interest at 8.5%.
The PropCo will issue $2,392 million in principal amounts of first lien debt with a five-year term and interest at LIBOR plus 3.5% with a 1% LIBOR floor.
The PropCo will issue $1,425 million in principal amounts of second lien debt with a six-year term and interest at 8.0%.
CPLV will issue $2,600 million in debt. No less than $2,000 million of this debt will sell to third-party investors for cash proceeds. Any remaining debt up to $600 million will constitute CPLV mezzanine debt. The weighted average yield on the debt will be capped so that the annual debt service won’t exceed $130 million.
PropCo preferred equity
The PropCo may issue up to $300 million of preferred equity. The proceeds will first reduce the CPLV debt to meet certain conditions and reduce new second lien PropCo debt.
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