By Matt Wirz And Matt Jarzemsky
BlackRock Inc. gave up its leadership role in negotiating a
debt-restructuring plan for Caesars Entertainment Corp.'s largest
unit Thursday night, people familiar with the matter said. The move
prompted the disclosure of hundreds of pages of documents about
confidential discussions with the casino giant in the latest twist
in the complicated and high-stakes talks.
BlackRock, the world's largest asset manager, stepped down from
a steering committee of senior bondholders because it deemed a
tentative deal Caesars reached with the bondholder group
unsatisfactory for holders of Caesars's loans, which BlackRock also
holds in some of its funds, according to people familiar with the
matter.
By making the confidential information it had received public,
BlackRock also freed itself up to trade Caesars's securities.
Creditors aren't permitted to trade during confidential
negotiations when they have access to inside information about a
company.
The law firm that released the documents Thursday night didn't
identify BlackRock as the bondholder that prompted the
disclosure.
Caesars is trying to get enough creditors to back a
restructuring plan for the unit, Caesars Entertainment Operating
Co., before a mid-January interest-payment deadline, according to
people familiar with the negotiations. The tentative deal the
company reached Thursday with the bondholder group would convert it
into a real-estate investment trust, which would be largely owned
by the senior bondholders and loan holders.
A group negotiating on behalf of the loan holders disclosed
details of the restructuring talks Thursday evening in a so-called
cleansing of its own, but the BlackRock release was far larger. The
475-page file gives a blow-by-blow account of the negotiation
process that began in September.
While BlackRock resigned from the bondholder group's steering
committee, it remains a member of the broader group, the people
said. The decision to stay involved in some capacity shows the fine
line large asset managers often walk in complex restructurings when
they hold multiple types of a company's debt.
It also highlights the difficulty Caesars is facing in trying to
reach an agreement with creditor groups that, at times, may have
conflicting interests. Caesars Entertainment Operating Co. has
about $18.4 billion in debt, much of which is held by hedge funds
that buy the debt of troubled companies.
Despite the overnight developments, Caesars's deal with the
bondholder group remains intact, people with knowledge of the talks
said. The company is trying to formalize a so-called restructuring
support agreement with the group by early next week, they
added.
The status of the company's negotiations with the loan holders,
however, is less clear. In a statement late Thursday, a steering
committee for the loan holders said Caesars hadn't reached an
agreement with the bondholders that they find acceptable.
"Despite the release of information by certain holders of bank
debt and a single holder of first-lien notes related to our
negotiations, the company remains in active discussions with
creditors in an effort to reach an agreement in the near term," a
Caesars spokesman said in an emailed statement. He declined to
elaborate on which creditors are currently negotiating with the
company.
Caesars took on a heavy debt load as a result of its 2008
leveraged buyout by private-equity firms Apollo Global Management
LLC and TPG. The business, formerly known as Harrah's Entertainment
Inc., was also hobbled by the financial crisis, the collapsing
gambling industry in Atlantic City, N.J., and the company's failure
to get a foothold in the Chinese gambling hub of Macau.
Multiple creditor groups have sued the company, saying it
engaged in improper financial maneuvering as it fought to stave off
bankruptcy. Caesars has said the suits are without merit.
Write to Matt Wirz at matthieu.wirz@wsj.com and Matt Jarzemsky
at matthew.jarzemsky@wsj.com
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