Caesars Entertainment Declares Bankruptcy or See Loveman's New Haircut
Well, we all knew it would come to this, Caesars Entertainment has filed for Chapter 11 bankruptcy protection. But there is more to the story than just that. Caesars has been in a battle with investors for roughly six months over terms contained in the pre-packaged agreement. At loggerheads, it became a giant game of financial chicken - would investors push Caesars to bankruptcy or would Caesars jump off the ledge, themselves. Caesars jumped.
At stake here are the assets. Caesars owners Apollo Texas-Pacific Group want to keep them and pass as much of the pain onto lenders as they possibly can. The solution Caesars has devised ratifies The Vegas Law - the house always wins.
To fully understand, it makes sense to have some understanding of Caesars Corporate Structure. This is an older version of the structure, some things have moved around over the last few months as bankruptcy proceedings loomed.
As you can see, Caesars is divided in to many many many subsidiary corporations, each of which hold different classes and types of assets, the organization of which was decided on by a crack team of poop-flinging monkeys with M.B.A.'s from a local online college.
Working from the top down, the entirety of what we call Caesars Entertainment is really a company called Hamlet Holdings. Hamlet Holdings is split into two subsidiaries, Caesars Aquisition Company (CAC) and Caesars Entertainment Company (CZR). CAC is newer purchases, emerging projects and online gaming. CAC makes up 48% of Hamlet Holdings, CZR the other 52%, 15% of which is floated on the Nasdaq under the $CZR ticker. Still following?
CZR proposes that - as part of the pre-packaged bankruptcy - one subsidiary 'Caesars Entertainment Operating Company' (CEOC) be split into two sub-subsidiaries, an OpCo and a PropCo. The PropCo is a real estate investment trust (REIT) which puts the property assets and land value of 18 properties into a trust whose beneficiary is lenders who Caesars has defaulted on. The OpCo is an operating company whose responsibility is to operate, maintain and upgrade the property as well as pay agreed upon amounts of rent to the PropCo for an agreed upon period of time. If OpCo defaults on payments the PropCo has the right to seek renumeration in various forms via moderation, lawsuit or seizure of properties.
Caesars has gotten approval of this plan by 80% of lenders, the other 20% are not on board. The case now goes to a bankruptcy judge, who will go through the whole thing sort out the details and find a solution. Should the judge agree with Caesars plan, Apollo Texas Pacific d/b/a Hamlet Holdings will be free and clear of debt, the REIT will be instituted and Caesars will have kept 2/3 of their assets by leveraging the real estate value of 3rd tier riverboats, declining Reno, Tahoe and AC joints plus Caesars Palace minus Octavius Tower.
A complex card game indeed, and when the house makes the rules, the house always wins... over time. Investing and gambling are both macro-economic games of chance.
Caesars set up a website http://www.ceocrestructuring.com upon which a serious, slightly contrite Caesars CEO Gary Loveman gives the "When The Fun Stops" speech to jilted investors. Also worth nothing that his extreme makeover seems to be reverting back to Dutch Boy. Stress, man.
The Latest:Introducing the Trippies Class of 2017
What I Did On My Summer Vacation - Part 2
Sayonara Wynn Nightlife Social Media History
Sayonara Bellagio Table Game Canopies
Trippies 2017 Webcast Live This Saturday!
Some Thoughts About Alon
Crown Pulls Out Of Alon
The Lucky Dragon Photo Safari
The Trippies 2017 Final Nominees Are...
The Trippies 2017 Nomination Phase Is Now Open
The Crown Of Macau... And Eventually Vegas
» Complete Archive