Caesars Shifts $1.6 Billion Interest Costs to Bankrupt Unit

Caesars Entertainment Corp., which is separating from its bankrupt unit, filed results showing that the operating company would have shouldered $1.6 billion in interest costs for the nine months ended in September if the split had occurred earlier.

The formal separation is the latest in a series of steps by Leon Black’s Apollo Global Management LLC to enhance the value of its controlling stake in Caesars’ casinos. The bankrupt unit’s pretax loss of $1.9 billion would have been almost equal to all of Caesars’s loss, according to the filing on Thursday with the U.S. Securities and Exchange Commission.

Creditors of the operating company are warring with Apollo over the private-equity firm’s bankruptcy plan, put together with a group of supportive lenders. They won a round last week, when a federal judge in Manhattan ruled that Caesars broke the law when it stripped billions of dollars in assets from the operating unit last year.

Apollo is trying to deal with a highly competitive casino market and about $25 billion in debt resulting from its takeover of Caesars with TPG Capital in 2008. In the proposed restructuring, the operating unit would take on $18.4 billion in debt. Few lenders would get everything back on a deal gone bad, but Black has promised some bondholders a payout for them and himself that the rest won’t get.

Caesars’s Apollo-backed bankruptcy was filed in Chicago last week, just days after dissident creditors filed their own in Delaware.

The cases are In re Caesars Entertainment Operating Co. Inc., 15-01145, U.S. Bankruptcy Court, Northern District of Illinois (Chicago); and In re Caesars Entertainment Operating Co. Inc., 15-10047, U.S. Bankruptcy Court, District of Delaware (Wilmington).

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