Caesars Boosts Offer to $4 Billion to Settle Bankruptcy Fightby
Updated plan arrives as casino giant faces litigation peril
Plan requires dissident creditors to abandon bond lawsuits
Caesars Entertainment Corp. boosted what it’s offering to get its operating unit out of bankruptcy and end a standoff with dissident creditors.
The latest offer, a package worth about $4 billion, was spelled out in an updated reorganization plan filed Wednesday in a Chicago bankruptcy court by Caesars Entertainment Operating Co. Previously, Caesars said it was willing to pay $1.5 billion in a combination of cash, stock and debt.
Under the new proposal, Caesars would give up to 47.5 percent of stock in a reorganized company to creditors and contribute $406 million in cash, $1 billion in convertible notes and a discount on rights to buy $500 million worth of stock.
To collect, lower-ranking creditors of the operating unit would have to drop lawsuits against the Caesars parent, known as CEC, that they say could be worth much more than $4 billion. An investigation by a court-appointed bankruptcy examiner concluded that creditors could get as much as $5.1 billion through lawsuits.
The latest plan avoids “the risks of potentially value-destructive litigation,” the operating unit said in its court papers. The proposal would let the unit exit bankruptcy by “securing substantial contributions from CEC and its affiliates to support significant near-term recoveries.”
Caesars has been defending its restructuring actions in courts in Delaware and New York since before the operating unit filed for bankruptcy protection. Creditors complained that the company improperly transferred valuable assets out of their reach and revoked a promise to repay billions of dollars. Noteholders owed about $11 billion have filed five lawsuits.
A committee of second-lien noteholders last week asked the bankruptcy judge in Chicago for permission to sue in his court on behalf of all the operating company’s creditors.
Law Vegas-based Caesars and the committee are working with a mediator to negotiate an end to their disputes.
Creditors have a right to vote on the new plan before it goes to U.S. Bankruptcy Judge A. Benjamin Goldgar for approval. That process could take several months.
The case is In re Caesars Entertainment Operating Co. Inc., 15-01145, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).