A second group of dissident debtors has shown up to spoil Caesars Entertainment‘s spinoff of high-value assets to Caesars Growth Properties (aka Little Caesars). The $2.2 billion purchase, incidentally, means that Little Caesars — which is majority owned by Big Caesars — has to go to the banks for another $1.3 billion. But hey, who’s counting at this point?
“[U]nnamed parties who assert that they are lenders” are alleging an improper transfer of assets. They also accuse Big Caesars of selling those properties for ‘inadequate consideration’ and that the parent company was insolvent at the time. The plaintiffs identify themselves only as holders of $1.85 billion in first-lien debt with Big Caesars. His thumb ever on the detonator, CEO Gary Loveman‘s response was to threaten to blow everything up: “termination of the Transactions, that could cause [Caesars Entertainment Operating Corp.], [Caesars Entertainment Resort Properties] and Planet Hollywood to default under existing debt agreements, and there can be no assurance that CEOC’s, CERP’s or Planet Hollywood’s assets would be sufficient to repay the applicable debt. In addition, if the contemplated transfers were consummated and a court were to find that those transfers were improper, that could trigger a default under the debt that CGP is raising to finance such transfers.”
In other words, everyone’s stuck with each other, right to the bitter end. It remains to be seen if this will restrain Big Caesars from offloading other properties to Little Caesars. The latter has already amassed the Octavius Tower at Caesars Palace (very clever, selling one part of a much larger building), Harrah’s New Orleans, The Quad, The Cromwell, Planet Hollywood Resort, Horseshoe Baltimore and Caesars Interactive. At that rate, it’s time to start counting the silverware.
