Caesars files Chicago bankruptcy to cut $ 10 b debt

Tuesday, 20 January 2015 00:21 -     - {{hitsCtrl.values.hits}}

Reuters: The operating unit of Caesars Entertainment Corp, the largest US casino company, filed for Chapter 11 bankruptcy in Chicago on Thursday to cut $ 10 billion of debt, but a Delaware judge intervened to halt the case before it got started. The unusual legal standoff marked the start of a more public phase of complex and contentious debt negotiations. Until now, the company’s attempts to cut interest payments after years of red ink have been kept mostly private. Caesars maintains it has the support of its senior note holders to implement the bankruptcy plan, which would reduce the operating unit’s debt to $ 8.6 billion from $ 18.4 billion. The bankruptcy was filed overnight by Caesars Entertainment Operating Company Inc and 179 affiliates in the US Bankruptcy Court in Chicago. However, junior noteholders, led by the Appaloosa Management hedge fund, filed an involuntary bankruptcy petition against the operating unit in Delaware. They argued at an emergency hearing in Wilmington on Thursday that their case should take precedence and the bankruptcy should proceed in Delaware. The two private equity firms Apollo Global Management and TPG Capital led the $ 30 billion leveraged buyout of Harrah’s Entertainment in 2008 to create Caesars. The buyout ran into trouble almost immediately as the economy slid into a deep recession and gambling proliferated in the United States to the point of saturation. Caesars also failed to get a foothold in Macau with its access to the Chinese market. Under the restructuring plan, the operating unit will be split into a casino company and a publicly traded real estate investment trust. There are no plans to close any casinos, and Caesars said it is operating normally.