WILMINGTON, Del (Reuters) - Caesars Entertainment Corp (CZR.O) and Caesars Acquisition Co CACQ.O have amended their proposed merger agreement, which is intertwined with the $18 billion bankruptcy of the casino company’s main operating unit, the companies said on Monday.
The operating unit, Caesars Entertainment Operating Co Inc, or CEOC, received approval from a U.S. Bankruptcy judge last month to begin seeking votes from creditors on its plan to restructure its debt and exit bankruptcy.
The bankruptcy plan would slash $10 billion of debt and split the CEOC unit into a new operating company and a real estate investment trust.
Caesars Entertainment is contributing billions of dollars of cash and equity to CEOC and that will help repay CEOC’s creditors.
Some of that cash will be generated by merging Caesars Entertainment with Caesars Acquisition. The merger was originally proposed in December 2014.
Under the amended terms, Caesars Acquisition shareholders will receive 27 percent of the merged entity. Under the original proposal, they would have received 38 percent, according to regulatory filings.
Caesars Acquisition owns Planet Hollywood Resort & Casino in Las Vegas and Harrah’s New Orleans, among other assets, which were acquired from the CEOC operating unit before its bankruptcy.
The Caesars Entertainment parent has said those acquisitions were done at fair value to relieve the CEOC unit of capital intensive projects.
CEOC’s junior creditors, led by Appaloosa Management, said those deals stripped billions of dollars of the best assets from the operating unit, leaving it bankrupt.
The junior creditors remain the biggest hold-outs in the CEOC bankruptcy and have said they have as much as $12 billion in claims against Caesars Entertainment and its private equity backers, Apollo Global Management and TPG Capital.
Time is of the essence as a temporary halt on lawsuits against the Caesars Entertainment parent by junior bondholders expires in August. Caesars Entertainment has said that court rulings in favor of the bondholders could threaten its contribution to the reorganization plan and plunge it into bankruptcy alongside CEOC.
A confirmation hearing on CEOC’s bankruptcy exit plan will begin on Jan. 17, two years after the company filed for Chapter 11 protection.
Reporting by Tom Hals in Wilmington, Delaware; editing by Grant McCool