A ROLL OF THE DICE
Caesars’ date in court
It’s showtime for Caesars. The casino giant, owned by private-equity firms Apollo Global Management and TPG Capital, needs to persuade a judge to extend a stay halting high-stakes lawsuits that threaten to put the entire company into bankruptcy.
Caesars Entertainment has until Monday to file court papers explaining why the cases should be put on hold so it can finish negotiating deals with junior creditors in its bankrupt operating unit.
Whether the judge agrees to extend the freeze, which expires Aug. 29, will mark a turning point in one of the most hard-fought bankruptcies in history. Judge Benjamin Goldgar in Chicago bankruptcy court has set an Aug. 23 hearing on the stay.
Last week the casino giant sweetened its offer to junior creditors to as much as 55 cents on the dollar, up from 29 cents to 48 cents under the old deal. As of last Monday, 37 percent of the second-lien bondholders had signed on to the new deal, according to the company.
However, a group of dissident bondholders, including David Tepper’s Appaloosa Management, has since told Caesars’ bankruptcy mediator that it rejects the latest offer.
The dissidents, who hold 54 percent of the second-lien notes, are closing ranks and have agreed they won’t sell their debt to anyone who does not agree to be a holdout as well, sources said.
“Why would we agree to take a discount from someone who stole our house,” said one debt holder.
The dissident creditors accuse Caesars of reneging on promises to repay billions of dollars in debt owed by its operating unit and of moving assets beyond their reach before putting the unit into bankruptcy in 2015.
The operating company owes the holdouts more than $5.5 billion in debt. If the parent is forced to make good on that debt, Caesars has said it will be forced into bankruptcy as well.
In June, Caesars won a 74day reprieve against suits in New York and Delaware while it tries to reach a restructuring deal with the creditors. At the time, Goldgar said the odds of extending the stay “will be slim.”
Goldgar also made it clear that Caesars should try to negotiate a deal with the holdouts rather than pressure them into a settlement.
“The purpose is not to give the debtors and Caesars an opportunity to avoid negotiations and then at confirmation cram a plan down on the second-lien note holders,” he said.
A court-appointed examiner in March found Caesars and its PE owners shortchanged creditors through the asset shuffling and could be on the hook for billions in damages.
In the New York case, Manhattan federal judge Jed Rakoff has scheduled a hearing for Aug. 30. Rakoff could decide the case as early as September, sources said.
Caesars declined to comment.