NEW YORK (TheStreet) -- Shares of Caesars Entertainment (CZR) - Get Report were slumping 5.92% to $8.90 in pre-market trading on Tuesday after Las Vegas-based casino reached an agreement with major creditors on a restructuring plan for its bankrupt operating unit.
The proposal would end a multi-year dispute between the main operating unit Caesars Entertainment Operating Company (CEOC) and a group of second-lien bondholders. The creditors control more than half of the CEOC's $5.5 billion in second-lien notes.
The new plan boosts the recovery rate for the company's second-lien noteholders, including Appaloosa Management, according to Bloomberg.
Under the new plan, second-lien bondholders and unsecured creditors will receive approximately 66 cents on the dollar, an increase of about 27 cents from the previous plan, the company said in a statement. Recovery rates for first lien bank lenders and subsidiary guaranteed noteholders decrease by approximately one cent.
Rates for first lien bondholders will remain at about 109 cents on the dollar.
CEOC creditors would own about 70% of the fully diluted equity.
The new plan must still be filed and approved in bankruptcy court, as well as receive regulatory approval.
The CEOC filed for Chapter 11 bankruptcy in January 2015 with $18 billion in debt.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
TheStreet Ratings team rate Caesars Entertainment as a Sell with a ratings score of D. This is driven by several weaknesses, which it believes should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks it covers. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and feeble growth in its earnings per share.
You can view the full analysis from the report here: CZR