Caesars Proposes a USD 4 Billion Bankruptcy Plan to Their Creditors

Caesars Entertainment Operating Co. has more than $18 billion in debt and as part of a revised plan to help its casino operating unit emerge from Chapter 11 bankruptcy, Caesars Entertainment Corp has offered creditors USD 4 billion (3.6 billion Euros), a plan that they hope will end the court fights. As a result, the creditors will receive a pay-out larger than what had been arranged under the initial agreement which included a USD 1.5 billion contribution from the Caesars Entertainment parent company.

The creditors who are collectively owed USD 18.4 billion have criticized this plan claiming that Caesars Entertainment had put many of its key hotel-casino facilities beyond their reach, a statement that has been denied by the company.

According to Blomberg, if this goes ahead as planned, Caesars would end up giving creditors up to 47.5 per cent of stock in the reorganized company, $1 billion in convertible notes and discounts on the rights to buy USD 500 million worth of stock and USD 406 million in cash.

Lawyer David Seligman, speaking on behalf of Caesars this week had the following to say to the Chicago bankruptcy court, “In terms of recoveries to creditors, they are substantially improved down the line.”

When speaking to the U.S. bankruptcy judge on Wednesday, he had said that the company would put USD 4 billion toward its restructuring agreement, a significant increase from the USD 1.5 billion that had been proposed originally. The USD 4 billion in question would be raised by Caesars selling off its interactive gaming arm after it had received offers in that region. Investment bank Raine Group LLC are said to be working closely with Caesars Entertainment’s Interactive Unit to evaluate unsolicited bids.

A plethora of groups are said to be interested in acquiring the Caesars Interactive Entertainment (CIE) divisions which include financial companies as well as businesses in the gaming, media and entertainment industries.

There is no guarantee that a deal for the Caesars Interactive Entertainment will happen according to Mitch Garber, CEO OF CIE.

He also stated that there is no formal process sales process, and it is possible there won’t be any deal, Mitch Garber, who runs the online-games businesses, said in an interview. “We want to hear what people have to say, for sure,” he said.

Any potential deal might not include the World Series of Poker but would instead involve Caesar Interactive Entertainment’s mobile-game business as the vast majority of the revenue comes from social casino games rather than real-money online gambling.

The social casino games generate annual sales of nearly USD 800 million and have demonstrated tremendous growth creating a year-over-year revenue growth of 28.8 per cent in the first quarter.

With such encouraging numbers, traditional videogame companies such as Nintendo, Sony and Activision have started strengthening their mobile offerings after years of worrying that such steps would cannibalize their other products.

Nintendo introduced its first smartphone game, called Miitomo in March whilst around the same time Sony announced that it would start making games for smartphones. The same year saw Activision Blizzard make a successful bid for ‘Candy Crush’ maker King Digital Entertainment PLC in a USD 6 billion deal.

Casino Entertainment Corp., the U.S. casino company had put its main operating unit into bankruptcy in January 2015. Before filing for bankruptcy, months of negotiation and litigation had taken place on how to best reduce the billions of dollars of debt assumed by the company in the 2008 buyout arranged by Leon Black’s Apollo Global Management and David Bonderman’s TPG Capital Management.

The buyout had occurred just before the U.S. was hit by the financial crisis and before the industry had been saturated by competition.

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