A group of Caesars Entertainment Corp. (CZR)’s most junior bondholders sent the company a letter yesterday objecting to its deal this week with other investors who own the same securities.
O’Brien LLP, a New York-based law firm headed by Sean O’Brien, said the transaction would “result in violations of our clients’ rights under their agreements with the company and under the law,” according to the letter. Bondholders who agreed to accept partial principal repayments from the casino operator’s most indebted unit in exchange for consent to a planned restructuring “are apparently being permitted to obtain preferential treatment of their holdings,” according to the letter, a copy of which was sent to Bloomberg News by O’Brien.
“We are going to argue that this transaction improperly provides special treatment to a select group of holders,” O’Brien said. Caesars hasn’t replied, he said.
Stephen Cohen, a spokesman for Caesars at New York-based Teneo Holdings LLC, declined to comment.
Caesars announced two deals in regulatory filings this week with different groups of bondholders it’s talking with to restructure the $20.8 billion debt load of its operating company. Las Vegas-based Caesars, taken private by Apollo Global Management LLC and TPG Capital in a $30.7 billion leveraged buyout in 2008, is battling with creditors as it seeks to rein in interest expense that exceeds its cash flow.
O’Brien said in the letter that the firm represents MeehanCombs LP and other holders of the unsecured notes due in 2016 and 2017. The letter was sent to Caesars Senior Vice President Scott E. Wiegand, and Kevin O’Brien, president and chief executive officer of Law Debenture Trust Co. of New York, the trustee of the unsecured notes.
Kevin O’Brien didn’t immediately return a phone message seeking comment.
Caesars paid $155.4 million to unsecured bondholders that agreed to support its restructuring plan, according to an Aug. 12 regulatory filing. The investors also agreed to amend their indenture to strip the parent-company guarantee on the $248.7 million of 6.5 percent notes due June 2016 and $147.9 million of 5.75 percent October 2017 bonds, a change that would apply to all the bonds because more than half the investors consented to the deal.
The letter demands that Caesars provide documents that were used to negotiate the transaction.
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