(Updates throughout with details from company statement)
By Karen Pierog
CHICAGO, Sept 21 Caesars Entertainment Corp
said on Wednesday it proposed along with its private
equity backers a settlement offer with an added $1.6 billion for
creditors of its casino operating unit, raising hopes of an end
to the subsidiary's costly bankruptcy.
Caesars closed at $8.10 on Nasdaq, up 21.4 percent.
Apollo Global Management and TPG Capital Management
, the private equity firms that control the Las
Vegas-based casino company, will fund the bulk of the deal by
contributing their stock in Caesars, which was estimated to be
worth $954 million.
The bankrupt unit, Caesars Entertainment Operating Co Inc or
CEOC, filed for bankruptcy in January 2015. Creditors have
alleged that the parent company, Apollo and TPG stripped CEOC of
its best casinos, leaving it unable to pay its $18 billion in
An independent examiner said in March Caesars and its
private equity backers could be on the hook for more than $5
billion in potential damages for the deals that preceded the
CEOC and its junior bondholders have been battling over the
amount the parent company, Apollo and TPG must contribute in
exchange for releases from creditors claims.
Caesars had previously offered more than $4 billion, while
junior creditors say they have claims worth $12.6 billion which
they have been pursuing against the parent in New York and
In Wednesday's deal, Caesars, its directors and officers and
its private equity backers will contribute $1.2 billion. Most of
that will be in Caesars stock along with more than $100 million
in cash from insurance.
The rest will come from reduced payouts to other CEOC
creditors known as the first-lien banks and first-lien
bondholders, who did not agree to the settlement.
The CEOC creditors have until the end of Friday to accept.
If they do not, Caesars said "CEOC has indicated that Caesars
Entertainment and the sponsors' support for the plan is
superceded and unnecessary."
Opposition to Caesars plan has been led by junior bondholder
Appaloosa Management, which did not immediately respond to a
request for comment.
The revised settlement offer comes a week after the judge
overseeing the bankruptcy ordered billionaire investors and
Caesars directors Marc Rowan of Apollo and David Bonderman of
TPG to disclose details of their wealth to the junior creditors.
The judge said they would have to show that they each have
the financial resources to contribute to CEOC's reorganization
plan, in exchange for releases from allegations of fraud.
(Reporting by Karen Pierog in Chicago; writing by Tom Hals in
Wilmington, Delaware; Editing by Sandra Maler)