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Caesars bondholders feel the pressure

NEW YORK, Perfectly 9 (IFR/RLPC) - With debt-laden gaming

giant Caesars widely to be able to undergo restructuring, current

bondholders often see their future negotiating power at the moment being

The corporate parent's guarantee behind binds issued by the

opco, Caesars Satisfaction Operating Company (CEOC), is

to be able to be removed under a credit affirmative amendment.

Analysts say this would immensely weaken the position of

current bondholders when CEOC, which is groaning deep under some

"If the opco could be described as restructured, there would have to be a recent

agreement with the bondholders to do so, alone Andrey Kuznetsov, a

"By clearing away the guarantee, bondholders will not only may have

less leverage at the negotiating furniture, will also

probably get a lower data restoration on their bonds. "

Private equity choose Apollo and TPG acquired Caesars in a

2008 leveraged buyout, placing the company with a mountain of

borrow money - and more is on the way.

CEOC plans to raise an additional US$1. 75bn in a new

first-lien term equity loan, which will repay more than US$1bn along with 2015

bond maturities if straight away tender the debt, as well as some

Together with proceeds from a sale of a handful of

condos, the funds will enhance the business liquidity.

Lead bank Credit Région romandie held a lender call on The day before the 24th for

the first-lien term equity loan B, and commitments were as a result on Friday

after the deadline used to be accelerated following an

indicated completely already received "orders" for US$1. 7bn.

The loan, maturing on Strut 1 2017 with a springing

readiness, is guided at Libor as 950bp, with a 1% Libor just after,

and a 98 original issue discounted. Call protection is non-call

of six months, then 101 for the next 6 long months, then par.

Despite the new lending, Moody's believes that signs area

"The planned transaction... does tiny bit to alleviate our

continuing view that the new company will pursue a more

good restructure of CEOC that will are based impairment

to creditors, " explained Moody's analyst Peggy Holloway.

"We still do not expect the company System.Drawing.Bitmap repay or

refinance its 2016 debt maturities in a manner that will keep

CEOC's 10% December 2018 second-lien binds have been pricing

in significant debts for months, falling to a cash associated with 40

cents on the dollar soon before recovering to around 45.

The company's 8. 5% February 2020 first-lien bonds, however , had been

considered sweet safe - until the company stated this week

it would try to remove the parent's guarantee.

The 2020s quickly released seven points to 78. 5 estimate.

"The sharper drop in the first-lien bonds suggests that

those bondholders decided not to expect to be affected in a well known

The company is also raising a new equity loan at the level of

The US$700m first-lien term loan will mature in a year,

with potential for a one-year extension. Proceeds will back

CGP's recently completed acquisitions of Bally's Las Vegas, The

Cromwell and The Quad Resort & Casino from CEOC.

The company said this week that it a good sold 5% of CEOC

justness for US$6. 125m - a meaningful move intended to release CEC such as

"The company appears to have threaded the needle to both

work on the position of Caesars' equity so to diminish the

position of primarily and second-lien bondholders, " explained Chris Snow

"The sponsors may have effectively increased the size of both

one of the carrot and the stick as it are likely to seek to address [ie, coerce]

Revious that, however , a legal fight with bondholders could

be on the cards whilst sponsors isolate the group's nutritious assets

from any potential bankruptcy proceeding filing at the opco.

CreditSights explained the next step was likely to be a

rough debt exchange targeting the diving second-lien

bonds. The problem there, nonetheless is that the current price of

those binds does not make such an exchange tenable.

"We believe the 2018 second-liens and the 2020 first-liens

are discount two vastly different scenarios, alone the research

"The second-liens are over-confident in their blocking

position in a rearrangement, reshuffling and in the potential value of the

as soon as guarantee. The first-liens are overreacting to

expectations of more horrible outcomes, such as further collateral

(Reporting by Natalie Harrison; IFR; coupled with Natalie Wright; RLPC;

Editing to Marc Carnegie and Matthew Davies)

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