Caesars Entertainment Corp.'s (CZR) largest unit has reached an
agreement with senior bondholders to slash the unit's $18.4 billion
debt, the latest step as the company seeks bankruptcy protection to
restructure operations.
Caesars said it would put up to $1.45 billion in cash to support
the proposal to shift the unit's assets to a publicly traded real
estate investment trust that would then lease the property to the
company for $635 million a year.
Caesar has agreed to guarantee those lease payments.
Negotiations continue with Caesars's remaining creditors.
The restructuring--subject to regulatory and court
approval--seeks to cut debt by about $10 billion and interest
expenses by about 75% to an estimated $450 million.
Caesars has been saddled by heavy debt load taken on since its
2008 leveraged buyout by private-equity firms Apollo Global
Management LLC and TPG, compounded by economic woes.
Last week, the unit skipped a $235-million interest payment on
junior bonds, triggering a 30-day grace period before a default.
Standard & Poor's responded by slashing four notches, to its
lowest level, the unit's corporate rating. "We consider a default
to have occurred, despite a grace period exists, if we do not
believe payment will be made within the stated grace period,"
S&P credit analyst Melissa Long said at the time in a
statement.
-- Matt Jarzemsky contributed to this article.
Write to Maria Armental at maria.armental@wsj.com
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