Caesars Entertainment Corp (CEC) has settled one of several bondholder lawsuits in a move that could signal the beginning of the end in its long-running $18 billion (€15.9 billion) bankruptcy saga.
The settlement resolves a class-action lawsuit brought by Frederick Barton Danner, one of the holders of unsecured bond debt issued by its Caesars Entertainment Operating Co (CEOC) unit.
The suit, filed almost two years ago, claimed an August 2014 financing transaction was improperly designed to release Caesars of its guarantee of $750 million in unsecured debt due in 2016.
Under the settlement, which Caesars disclosed yesterday (Wednesday) in a filing with the Securities and Exchange Commission, lead plaintiff Danner agreed to drop the lawsuit in a New York federal court and to support CEOC’s Chapter 11 restructuring.
The filing said that in return, CEOC will pay Danner’s legal fees and provide extra cash to the unsecured bondholders, excluding a Caesars affiliate and bondholders who are separately suing Caesars.
The settlement also provides unsecured bondholders who back CEOC’s restructuring plan with extra cash equal to at least 6.38 cents for each dollar of bond debt they hold.
According to the Wall Street Journal newspaper, Danner’s lawyer, Gordon Novod, said that the settlement marks “new and significant progress in the pursuit of remedies” for the bondholders.
“We’re optimistic that the settlement will be consummated in conjunction with the successful reorganisation of [CEOC],” said Novod, of the Grant & Eisenhofer law firm.
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