Updating the market on Tuesday, Caesars Entertainment Corp (CEC) governance declared that it had reached a $5 billion settlement with the majority of creditors owed by its bankrupt operating unit Caesars Entertainment Operating Co (COEC).
Following nearly two years of litigation disputes, the COEC $18 billion bankruptcy restructure clears its biggest hurdle with private equity backers Apollo Global Management and TPG Capital Management agreeing to diminish their company equity in Caesars to 16% (original stake 66%).
For months, multiple creditors had been in legal dispute with Apollo and TPG, accusing the private equity firms of diminishing Caesar’s corporate value by ‘asset stripping’ COEC.
Under the new bankruptcy terms, creditors have agreed not to legally pursue Apollo or TPG who have shrunk their COEC assets as part of the agreement.
Moving forward Apollo and TPG governances cannot be held responsible for the bankruptcy of Caesars, a company formed in 2008 through a $30 billion leveraged buyout of Harrah’s just before a U.S. economic downturn.
US business news sources report that junior creditors are set to receive circa ‘66 cents on the dollar’, up from the 27 cents proposed in the previous COEC restructure.
Agreeing the restructured framework with its main creditors, Caesars’s COEC unit will now aim to significantly reduce its operating debt. The company informed that The settlement needs to be formalised and approved by the U.S. Bankruptcy Court in Chicago.