Caesars could accomplish this by buying back its notes due in 2015, 2016, and 2017. If one type of operating company creditor loses its parent guarantee, everyone loses their parent guarantees.
Alternatively, Caesars could get a waiver on the parent guarantee on its bank debt, or buy back the bank debt. The company would certainly have to give those parties an attractive deal, but if one acquiesced, the other would lose its parent guarantee. Then Caesars could slide into Chapter 11 with its Caesars Growth Partners assets and property company assets cordoned off more securely.
Fitch Ratings Inc. said on Sept. 18 that it expects to give the new first-lien debt issued at Caesars Entertainment Resort Properties LLC--the $3 billion term loan, the $269.5 million revolver, and the $500 million in notes--a rating of B-, while the $1.35 billion in second-lien notes are expected to score a CCC.
The ratings agency explained that its ratings on Caesars Entertainment Resorts' debt are under pressure due to concerns about a default at the Caesars Operating Co. unit.Fitch said it would examine the restricted payment covenants when the property unit releases its new credit agreement, in order to see what protections the agreement provides in the case of an operating company default. Fitch also affirmed its CCC ratings on parent company Caesars Entertainment Corp. and its Caesars Operating Co. unit. Apollo Global Management and TPG Capital hold a 70% stake in Caesars from a 2008 buyout that clocked in at a whopping $30.7 billion with $12.4 billion in debt. Caesars' common stock is listed on Nasdaq under the symbol CZR. Its shares dropped nearly 10% from its pre-refinancing-announcement closing price of $25.93 on Sept. 17 to a closing price $23.39 on Wednesday. Written by Lisa Allen
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV