CHICAGO (Reuters) - Caesars Entertainment Corp (CZR.O) has wrapped up the $18 billion bankruptcy of its main operating unit, allowing the casino company to focus on restoring the tarnished Harrah’s, Caesars and Horseshoe brands after two years of Chapter 11 proceedings.
Caesars’ subsidiary, Caesars Entertainment Operating Co Inc (CEOC), won court approval on Tuesday for a plan to shed $10 billion of debt and separate its U.S.-based property assets from its gaming operations.
The company expects to emerge from bankruptcy later this year.
“Upon CEOC’s emergence, we will be positioned to strengthen our financial and operational performance by pursuing new opportunities to invest in and expand our brands and business,” Mark Frissora, president and chief executive officer of Caesars Entertainment, said in a statement.
As part of the reorganization plan, Caesars Entertainment - formed from the 2008 buyout of Harrah’s - will merge with another subsidiary, Caesars Acquisition Co CACQ.O, with a view to regrouping its casinos and hotels under one roof.
The new Caesars group will compete with gaming companies such as MGM Resorts International (MGM.N), Wynn Resorts Ltd (WYNN.O) and Las Vegas Sands Corp (LVS.N), each with a heavy presence on the Las Vegas Strip.
Analysts said they expect the new group’s leverage to be on the high end versus its peers but said it was better positioned to attract new business from millennials to offset an expected slowdown in its traditional slot machine business as baby boomers retire.
“Caesars has been one of the pioneers in that respect,” said Gaming Union analyst John DeCree. “The biggest challenge is going to be getting the new structure under control.”
The Caesars reorganization plan is subject to certain gaming regulatory approval and financing transactions, as well as the completion of the parent’s merger with Caesars Acquisition.
Caesars struck a $5 billion settlement in September to end the bankruptcy, which had pitted aggressive and deep-pocketed creditors against private equity sponsors Apollo Global Management (APO.N) and TPG Capital Management LP [TPG.UL].
It overcame a final objection from the U.S. Trustee, a U.S. bankruptcy watchdog, last week by modifying certain legal protections granted under the plan.
“It is a monumental achievement,” U.S. Bankruptcy Judge Benjamin Goldgar said at the confirmation hearing in Chicago.
Apollo and TPG are to retain a 16 percent collective stake in the new Caesars, which will be controlled by creditors, but will not own any equity in the real estate investment trust that will house the property assets.
Reporting by Tracy Rucinski, Editing by Tom Hals and Dan Grebler