Apollo, TPG Offered $250 Million for Caesars Deal, Filing Shows

  • Bondholders asked for ‘several times’ more, executives say
  • Bankruptcy judge has criticized Apollo for not chipping in

Apollo Global Management LLC and TPG Capital offered to pay $250 million to help get Caesars Entertainment Operating Co. out of bankruptcy, according to two Apollo executives, contradicting claims that the casino company’s private-equity sponsors refused to spend their own money to make peace with creditors.

A mediator working to foster agreement between bondholders and parent company Caesars Entertainment Corp. asked Apollo and TPG whether they “would fund up to $250 million to reach a ‘best and final’ deal” that paid the bondholders 58 percent of what they are owed, Apollo executives Marc J. Rowan and David B. Sambur said in a filing Wednesday in Chicago federal court. 

The mediator “was advised that the sponsors would provide the incremental funding,” Rowan and Sambur said in the filing, which asks U.S. Bankruptcy Judge A. Benjamin Goldgar to block the bondholders’ request for personal financial information.

Settlement talks involving Rowan and Sambur last month failed to produce a deal, according to Wednesday’s filing. The executives said the bondholders demanded “several times” the $250 million offered.

Last month, Goldgar complained that the private equity firms, which control Las Vegas-based Caesars, were seeking to use bankruptcy to get a “free ride” past potential damages in bondholder lawsuits related to the operating company’s collapse. 

The bondholders say the parent, at the behest of Apollo and TPG, abandoned a repayment guarantee and shifted assets out of the the operating unit that could have been used to pay its debts.

Apollo, TPG and Caesars have denied the bondholder claims and vowed to fight the lawsuits. The private equity companies own about 60 percent of the parent, which in turn owns the bankrupt operating unit. So far, Caesars has offered to pay what it says is the equivalent of about $4 billion in cash, new debt and stock to help reorganize the unit. The bondholders are holding out for more before signing onto a bankruptcy plan and releasing Caesars, Apollo, TPG and their executives from liability.

Bruce Bennett, an attorney for the holdout bondholders, declined to comment on the filing. His clients are expected to file a response in court next week.

At an August hearing, a financial adviser for the operating unit told Goldgar that Apollo and TPG refused to pay anything. In their filing, Rowan and Sambur said the adviser wasn’t in the room when the mediator was told about the $250 million offer.

Goldgar last month lifted a freeze on the bondholder litigation, but the lawsuits remain on hold until next month while Caesars appeals the judge’s decision. Caesars has said it would probably to join its operating unit in bankruptcy if the bondholders win the lawsuits, which are pending in New York and Delaware.

The bankruptcy is In re Caesars Entertainment Operating Co. Inc., 15-01145, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).

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