Caesars Wins More Bankruptcy Support Through BlackRock Bond SaleLaura J. Keller
Caesars Entertainment Corp. won more support for a plan to put its biggest unit into bankruptcy as soon as next week after a bondholder group that’s already on board with the restructuring bought $500 million of debt from BlackRock Inc., according to two people with knowledge of the matter.
Caesars, owned by Apollo Global Management LLC and TPG Capital, has been negotiating with creditors for four months on a plan to reorganize Caesars Entertainment Operating Co., the subsidiary that owns most of its casinos. Its proposal would restructure $18.4 billion of debt by putting the unit into bankruptcy as soon as Jan. 15 and turning it into a real estate investment trust.
The Las Vegas-based company needed 60 percent of its first-lien bondholders to sign onto the plan by Jan. 12 under the terms of a deal struck with some creditors last month. Caesars said in a regulatory filing today before the trade that it already had 55 percent. The $500 million BlackRock sold represents another 8 percent, bringing the total to at least 63 percent.
Under the U.S. bankruptcy code, the casino operator needs two-thirds of the bondholders to commit to its strategy before it can implement it in court.
Hedge fund Elliott Management Corp. led the purchase and corralled orders from others among the 18 senior bondholders who’d signed Caesars’s bankruptcy plan, said the people, who asked not to be identified because the transaction was private.
The group outbid a rival faction represented by law firm Debevoise & Plimpton LLP that’s seeking more money from Caesars in a restructuring, said one of those people and another person with knowledge of the matter. Caesars has proposed giving first-lien bondholders 93.8 cents on the dollar.
Citigroup Inc. managed today’s sale of the notes.
Farrell Denby, a spokesman for BlackRock, declined to comment, as did Michael O’Looney, a spokesman for Elliott, and Robert Julavits of Citigroup.
My Chi To, an attorney at Debevoise representing the rival group, and Gary Thompson, a spokesman at Las Vegas-based Caesars, also declined to comment.
Last month, BlackRock dropped out of the group of first-lien holders who purchased the bonds today. It exited restructuring talks along with Caesars’s highest-ranked lenders, who still haven’t reached an agreement on how to restructure the casino operator’s largest subsidiary.
Caesars would have an easier time pushing through its reorganization proposal with the support of those lenders, too.
BlackRock sold the block of bonds -- which were mostly Caesars’s 9 percent secured notes due February 2020 -- for about 73 cents on the dollar, two people said. The world’s biggest money manager also included some 11.25 percent secured debt due 2017, they said.
The 2017 notes climbed 1.25 cents to 75 cents at 2:19 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Caesars, which has lost money every year since 2009, has struggled to meet its obligations after being taken private for $30.7 billion by Apollo and TPG in 2008. The deal, struck before the credit crisis unfolded, was part of a buyout boom fueled by cheap borrowing costs that spawned super-sized takeovers.