Caesars Subsidiary Receives Default Notice From Bondholders
A fund representing Caesars Entertainment Corp's group of bondholders declared part of the company's borrowings in default after offering collateral to senior creditors.
Caesars declared the case in a filing with regulators but declined to comment further.
The default notice was sent by the Wilmington Savings Fund Society, a trust representing $3.7 billion of Caesars Entertainment Operating Corporation's 10% secondary lien due in December 2018.
In a filing with the U.S. Securities and Exchange Commission, Caesars argued that CEOC's failure to grant a lien, a creditor's right to sell the secured property of a debtor who has not fulfilled its loan obligations, to a second lien agent "corresponds to default under the contract and a second lien security agreement."
Caesars is a major casino operator in the United States, but it has long operated its operations in Asia. Caesars is a joint venture of a planned casino resort in Incheon, South Korea. It aims to open the first phase by 2018.
The company is also interested in entering Japan once casino gambling becomes legal in the country. Gary Loveman, chief executive of the Las Vegas-based casino operator, said it could raise more debt to finance Japanese ventures.
The consolidated company's long-term debt rose to $24.2 billion at the end of June from $20.9 billion in December, according to industry analysts.
The company sold assets, transferred properties between units, paid off some of its debt and sold capital to pay off its debt. Bloomberg News reported in September that casino operators were engaging more groups of creditors to explore options to reduce long-term debt.
In August, the company announced a deal to reduce CEOC's debt by $548 million and reduce interest expenses by $34 million annually.
The casino operator is also suing some institutional investors in Manhattan's New York state court for trying to force CEOOC into default.
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