Caesars Entertainment Corp. (CZR)’s largest unit hired law firm Kirkland & Ellis LLP to advise the casino operator on how to reorganize its $17.4 billion of debt, according to a person with knowledge of the appointment.
Caesars Entertainment Operating Co. selected the New York-based company after taking pitches from restructuring firms this week, said the person, who asked not to be named because the matter is private. Blackstone Group LP (BX) has been working as the parent company’s adviser, the person said.
The gaming company, which was taken private in 2008 by Apollo Global Management LLC and TPG Capital for $30.7 billion, has been in a battle with its bondholders that may result in a broad restructuring of its debt load.
Caesars is fighting with creditors over a March deal that moved the Bally’s, Quad and Cromwell casino-hotels in Las Vegas and Harrah’s New Orleans from its operating unit to affiliate Caesars Acquisition Co. (CACQ), out of reach of the bondholders. The parent company created Caesars Acquisition, owner of the World Series of Poker, in October with two casinos it split from the operating company.
Gary Thompson, a spokesman for Las Vegas-based Caesars, declined to comment. Kate Slaasted, a spokeswoman for Kirkland & Ellis in Chicago, didn’t return a telephone call and an e-mail seeking comment. Christine Anderson, a spokeswoman for New York-based Blackstone, declined to comment.
The operating unit’s capital structure sprawls across more than a dozen pieces of secured and unsecured obligations. About 62 percent of its debt, or nearly $10.8 billion, sits at the first-lien level. Second-lien obligations total $5.4 billion, and unsecured debt, issued when the company was still doing business as Harrah’s Entertainment Inc., stands at about $1.3 billion.
Caesar’s $2.1 billion of 11.25 percent, first-lien notes due June 2017 have fallen to 91.1 cents on the dollar from more than 102 cents at the start of the year, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Caesars is positioned for a public clash with bondholders later this month when the company asks Illinois regulators for approval of a $1.75 billion refinancing that some creditors oppose. Representatives of some first- and second-lien debt holders were scheduled to speak at a hearing on the matter last month. The issue was postponed until the Illinois Gaming Board’s next meeting set for July 23-24.
(An earlier version of this story corrected the amount of Caesars Entertainment Operating Co.’s first-lien debt.)
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