Caesars Bonds Rise After Restructuring Payout DisclosureLaura J. Keller
The top-tier bonds of Caesars Entertainment Corp.’s largest unit rose after news of a debt-restructuring plan that proposed to give senior creditors a near-par recovery of principal.
All of the company’s first-lien bonds rose at least 1.7 cents on the dollar since Bloomberg News reported details of the proposal yesterday.
The most indebted U.S. gaming company disclosed in a regulatory filing yesterday that it presented creditors with a plan to cut borrowings at Caesars Entertainment Operating Co. that would provide first-lien bondholders with 93.8 cents on the dollar in cash, debt and equity. That would be about 17 cents higher than indicated by trading prices of $6.35 billion of first-lien securities before the plan was disclosed.
Caesars, based in Las Vegas, is in talks with a group of first-lien bondholders and a separate group of loan holders to restructure $18.4 billion of debt at its Caesars Entertainment Operating Co. subsidiary. The company has discussed plans with those creditors to put the unit into bankruptcy protection and turn it into a real estate investment trust.
The operating company’s $2.1 billion of 11.25 percent first-lien secured notes due June 2017 jumped almost 2 cents on the dollar, according to Trace, the bond-price reporting service of the Financial Industry Regulatory Authority. The notes traded at 78 cents on the dollar at 11:49 a.m. in New York, compared with 76.3 on Nov. 18, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The securities now yield 23 percent.
The more active half of its $3 billion of 9 percent first-lien secured notes due February 2020 climbed 2.2 cents on the dollar since the restructuring proposal news. Those notes, trading under the CUSIP EJ7751914, were exchanged at 78.2 cents on the dollar at 11:10 a.m. in New York, Trace data show.
The other half of the 9 percent notes rose to 78 cents on the dollar at 10:14 a.m. in New York from 76.5 cents on Nov. 14, the data show.
Caesars second-lien securities, which would receive an undetermined amount of equity under the restructuring proposal, fell to a new low today. The $3.6 billion of 10 percent second-lien notes due December 2018 dropped to 13.2 cents on the dollar, according to Trace. The notes traded at 48.4 cents at the start of the year.
The second-lien investors would receive a “de minimis” amount of equity, according to the filing. If they agree to the restructuring plan, they would get an additional amount “to be determined.”
Apollo Global Management LLC and TPG Capital took the parent company private for $30.7 billion in 2008. Caesars has lost money every year since 2009 and warned its largest unit would run out of cash to pay its debt by the fourth quarter of 2015 without actions to reconfigure its obligations.
Caesars shares rose 6.3 percent to $15.17 at 12:24 p.m. in New York.