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US – Bondholders claim Caesars’ collateral is tantamount to default

By - 13 October 2014

A group of bondholders at Caesars Entertainment have said that the indebted casino operator’s largest unit is in default after it pledged collateral to senior creditors without granting similar claims to them.

Caesars is in discussions with the senior creditors of its biggest unit to reduce the company’s $24.2bn in long-term debt.

Wilmington Savings Fund Society, a trustee representing holders of $3.7bn of Caesars Entertainment Operating Co.’s 10 per cent second-lien notes due December 2018, claimed that the decision not to grant them a claim on certain assets constitutes a default. The claim was disclosed by Las Vegas-based Caesars in a US Securities and Exchange Commission filing. Caesars has 60 days to take action that would avoid a default.

According to the filing, holders who own at least 30 percent of these securities ‘may accelerate the notes upon an actual event of default.’ Last month, Caesar’s gave senior bondholders and its loan investors the right to potential proceeds from lawsuits brought against it, including the suggestion it had fraudulently transferred assets away from investors.

In other news, Caesars has appointed Keith Causey as Senior Vice President and Chief Accounting Officer. He replaces Diane Wilfong, who has left the company to pursue another opportunity. There are no disagreements between Wilfong and Caesars Entertainment regarding the company’s financial reporting, operations, policies or practices.

“We are pleased to welcome Keith, who brings significant public company experience with large and complex organizations. With more than 20 years of experience, Keith brings an extensive technical accounting background as well as regulatory compliance expertise, making him an ideal candidate for this role,” said Donald Colvin, Executive Vice President and CFO of Caesars Entertainment.

As Chief Accounting Officer, Mr. Causey will have responsibility over all corporate accounting and internal audit functions and will report to Colvin. He joins Caesars Entertainment from General Motors, where he served as Executive Director, Global Business Services – Finance.

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