Caesars Entertainment stock rallied today on news that the company had palliated its junior creditors by offering them a $200 million forbearance fee along with 10% ownership of the REIT, which it 
characterized as “a substantial improvement in recoveries.” Caesars claims to have a “significant amount” of junior debtors behind the move. It also plumped up the value of its proposed REIT by transferring Harrah’s New Orleans and Harrah’s Laughlin into it if the deal goes through. The Motley Fool‘s Travis Hoium, however, wasn’t buying it. He characterized it as a last-ditch move to keep Caesars Entertainment from toppling into bankruptcy, too. Currently it’s teetering on the precipice, as Judge Benjamin Goldgar prepares to rule on whether lawsuits challenging the alleged “fraudulent conveyances” of assets out of Caesars Entertainment Operating Co. can move forward or not.
“This latest offer at least gives second-lien note holders something to think about, but there’s not an agreement with a large enough group of these holders to go forward, at least not yet. At the end of the day, I think Caesars Entertainment will still be pulled 
into bankruptcy because note holders will likely get a better deal if they win the other lawsuits and all of Caesars’ assets are on the table to split up among debtors,” writes Hoium, adding that “investors would be wise to stay away from this failing company.” Don’t be fooled by the term “junior creditors,” as these ‘newbies’ include the likes of Soros Management Fund and Paulson & Co. In other words, when dealing with Caesars, they weren’t born yesterday.
Bloomberg Intelligence analyst Barbara Winters said, “From the second-lien perspective, anything is better” than what Caesars was previously offering and truer words were never spoken. The question is, is the increased equity enough for the junior debtors to go easy on Caesars? This story won’t be over anytime soon, as Caesars’ target date for emergence from bankruptcy is now July 15, 2016.
* James Packer can start concentrating on his Alon project for the Las Vegas Strip. The government of Queensland passed over his 
casino proposal for downtown Brisbane in favor of one from archrival Echo Entertainment. ABC News Australia reported that it was “a decision that may hurt James Packer’s pride more than Crown’s bottom line. Crown [Entertainment] shareholders are likely to be breathing a sigh of relief that the cash strapped company will not have yet another project to bankroll.”
Presently, Packer and Lawrence Ho are finishing $3.2 billion Studio City in Macao, in the teeth of that enclave’s fiercest recession yet. As for Alon, ABC reports that it “has some investors full of fear and loathing after Packer’s previous bid to build a casino on the strip failed spectacularly.” Packer is also building a casino in Sydney, so you could say his plate’s pretty much full at the moment.
