Caesars Entertainment Operating Company will finance its bankruptcy exit in part via the CMBS market, according to a source familiar with the company and a person briefed. The company is on track to exit bankruptcy court protection in October, according to Joe Graham, an attorney representing CEOC.
The company has long said it will use up to USD 2.2bn in debt on its marquee Caesars Palace Las Vegas strip property to help finance its bankruptcy exit. In a 6 June filing, Caesars said it was likely to borrow a five-year, fixed-rate IO loan split between a USD 1.55bn mortgage, a USD 250m senior mezzanine loan, a USD 200m intermediate mezzanine loan and a USD 200m junior mezzanine loan.
But it had been unclear whether the company would settle on CMBS financing or unsecuritized debt. The company has now opted in favor of CMBS, though it is still finalizing the terms, the person briefed said.
A CEOC spokesperson did not immediately respond to a request for comment.
JPMorgan and Barclays Capital were tasked with soliciting a lender or lenders to provide the loans to refinance the fee and leasehold interest in its Caesars Palace Las Vegas, a 3,974 room full-service luxury resort and casino, according to the June filing.
Graham provided an update on the bankruptcy exit in a hearing today (16 August) before Judge A Benjamin Goldgar of the US Bankruptcy Court for the Northern District of Illinois.
The company still needs to obtain regulatory approval of its reorganization from Nevada, Louisiana and Missouri, he said. “All in all, we’re staying on track,” Graham said. “We expect to exit at the end of October.”
As of 14 July the company had received approvals from gaming authorities in New Jersey, Indiana, Pennsylvania, Iowa, Maryland, Mississippi and Illinois. The company had previously expected to exit bankruptcy this summer.
The CMBS market is likely to be able to absorb the Caesars debt though it might need to be spread across a number of deals, according to an analyst. The financing earlier in the year was expected to be even larger, or as much as USD 2.6bn, as Debtwire reported on 20 April.
CEOC won confirmation of its reorganization plan on 17 January, two years and two days after it filed its voluntary Chapter 11 petition, as reported. Under the plan, the reorganized company will separate its real property assets from its gaming operations. A real estate investment trust controlled by CEOC creditors will hold substantially all of the debtors’ real property assets and an operating company will continue to control Caesars operations, gaming licenses and personal property.