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In re Caesars Entertainment Operating Company, Inc., et al.
Official Committee of Second Priority Noteholders
Case No. 15-01145 (ABJ) Jointly Administered
United States Bankruptcy Court, Northern District of Illinois
General Information:

On January 15, 2015, Caesars Entertainment Operating Company, Inc., et al. (the “Debtors”) filed voluntary petitions for relief under chapter 11 of the United States Code in the United States Bankruptcy Court for the Northern District of Illinois in Chicago. The cases are pending before the Honorable Judge A. Benjamin Goldgar and are jointly administered under Case No. 15-01145.

NOTICE OF PROPOSED REVISIONS TO CONVERTIBLE NOTE INDENTURE

During discussions between Noteholder Committee and Caesars Entertainment Corporation (“CEC”) to finalize the form of Convertible Note Indenture (the “Indenture”) that was filed in October 2016, CEC and its advisers requested revisions to a discrete set of provisions and definitions in the Indenture. Below please find links to a clean version of the revised Indenture, a comparison to the October 2016 version of the Indenture, and a presentation by Houlihan Lokey identifying specific changes and the rationale behind the changes. Please review the materials related to the Indenture and contact Jay Weinberger (jweinberger@hl.com) at Houlihan Lokey, or Sidney Levinson (slevinson@jonesday.com) or Josh Mester (jmester@jonesday.com) at Jones Day if you have any comments or questions. The Noteholder Committee will consider questions or comments regarding the revised Indenture until August 31, 2017 at 5:00 p.m. Eastern. After that time, the Noteholder Committee will finalize the Indenture with the final version filed on the docket as part of the Debtors’ Plan Supplement.

Revised Clean CEC Convertible Note Indenture

Comparison of Revised Convertible Note Indenture to October 2016 filed version

Houlihan Presentation Regarding New CEC Convert Indenture Update
CONFIRMATION OF THIRD AMENDED JOINT PLAN OF REORGANIZATION

On January 17, 2017, the Bankruptcy Court entered an order confirming the Debtors' Third Amended Joint Plan of Reorganization in the form filed on January 13, 2017 with the Bankruptcy Court. A copy of the Confirmation Order and the Third Amended Plan is available here. Later that day, the Debtors filed a Notice of Entry of the Confirmation Order, a copy of which is available here.

BRIEF SUMMARY OF THIRD AMENDED JOINT PLAN OF REORGANIZATION

The Noteholder Committee has prepared a brief summary of certain aspects of the Third Amended Plan and related plan documents based upon publicly available information as of January 2017. A copy of the brief summary is available here.
Statement from Official Committee of Second Priority Noteholders of Caesars Entertainment Operating Company, Inc.

The Official Committee of Second-Priority Noteholders in the bankruptcy cases of CEOC and its subsidiaries urges Second Priority Noteholders to VOTE YES on the Third Amended Joint Plan Of Reorganization Pursuant To Chapter 11 Of The Bankruptcy Code proposed by CEOC and its subsidiaries prior to the voting deadline of November 21, 2016 at 4:00 p.m. Central. The Noteholder Committee's letter in support of the Third Amended Plan is available here.
THIS STATEMENT IS NOT, AND SHALL NOT BE DEEMED, A SOLICITATION FOR CONSENTS TO ANY PLAN PURSUANT TO SECTIONS 1125 AND 1126 OF THE BANKRUPTCY CODE OR A SOLICITATION TO TENDER OR EXCHANGE OF ANY CLAIMS.

The Official Committee of Second Priority Noteholders today reached an agreement with Caesars Entertainment Operating Company, Inc. (“CEOC”), Caesars Entertainment Corporation (“CEC”), Caesars Acquisition Company (“CAC”), and certain entities that own interests in CEC to revise the economic terms of the distributions included in the plan of reorganization that was previously filed by CEOC and to settle claims of the Second Priority Noteholders against CEC under guarantees of the Second Priority Notes that CEC has asserted were terminated in 2014. Confirmation of the revised plan and the distributions specified in the plan are subject to numerous conditions, including confirmation by an order of the United States Bankruptcy Court for the Northern District of Illinois.

At midpoint values, the distribution to the Second Priority Notes class totals $3.62 billion, or 65.5 cents on the dollar (exclusive of $47 million in reimbursement of expenses incurred by holders of Second Priority Notes and indenture trustees), an increase of $1.51 billion from the distributions accorded to that class under CEOC’s most recently filed plan. At the beginning of the chapter 11 cases for CEOC and its subsidiaries, the debtors had agreed with other constituencies to offer the Second Priority Notes class equity estimated to be worth approximately $487 million, or 9 cents on the dollar. As part of the bankruptcy cases, an independent, court-appointed Examiner concluded that the estates had significant claims related to pre-petition transactions that stripped assets from CEOC for the benefit of CEC, CAC, Apollo Global Management, and TPG Capital. Specifically, the Examiner found that “strong” or “reasonable” claims ranged from $3.6 billion to $5.1 billion. The Examiner’s report was very helpful in focusing the parties on the value of these claims.

The agreement contemplates the filing of a revised plan of reorganization that will provide for a distribution to holders of Second Priority Notes of: (i) $344.6 million in cash (ii) $899 million principal amount of 5% New CEC Convertible Notes, which is convertible into 11.02% of common shares of New CEC, before taking into account the buyback of New CEC common shares described herein and (iii) 32.02% of the fully diluted pre-buyback of New CEC common shares (37.11% pre-dilution from the New CEC Convertible Notes) having a midpoint valuation of $2.18 billion. The revised plan will also provide that New CEC will purchase a minimum of $905.1 million and a maximum of $1.09 billion of the New CEC common shares to be issued pro rata to the Second Priority Notes. Assuming the full $1.09 billion buyback of equity issued to the Second Priority Notes, distributions to the Second Priority Notes will include: (i) $1.43 billion in cash; (ii) $899 million principal amount of 5% Convertible Notes (valued at $1.09 billion), which is convertible into 14.93% of New CEC common shares assuming the maximum cash buyback of New CEC common shares; and (iii) 19.07% of the fully diluted of New CEC common shares (23.42% pre-dilution from the New CEC Convertible Notes) having a midpoint valuation of $1.10 billion.

The Official Committee of Second Priority Noteholders is represented by Jones Day (team led by Bruce Bennett, Sid Levinson, Geoff Stewart and Josh Mester), Houlihan Lokey (team led by Tuck Hardie, David Hilty, and Jay Weinberger), and Zolfo Cooper (team led by Scott Winn, David MacGreevey and Erik Bell).

A copy of the Term Sheet can be found through the link below.

Term Sheet
Information on how to receive a ballot is included in the Solicitation Procedures, a copy of which is available below.

Debtors’ Disclosure Statement and Plan
Order Approving the Disclosure Statement
Notice of Confirmation Hearing
Solicitation Procedures
Order Approving the Confirmation Schedule
Termination of Cooperation Agreement

The Amended and Restated Cooperation Agreement among certain second priority noteholders has been terminated effective as of October 5, 2016.

Important Dates, Deadlines & Documents

January 17, 2017

January 17, 2017
(10:30 a.m. CT)

October 31, 2016
(4:00 p.m. CT)

October 31, 2016
(4:00 p.m. CT)

June 29, 2016
(5:00 p.m. CT)

July 14, 2015
(5:00 p.m. CT)

May 26, 2015
(5:00 p.m. CT)

January 15, 2015

Meeting of Creditors

The meeting of creditors pursuant to section 341 of the Bankruptcy Code (the "341 Meeting") was held on April 20, 2015 at the following location:

Office of the United States Trustee
219 S. Dearborn Street, 8th Floor, Room 802
Chicago, IL 60604

Rule 9001(5) of the Federal Rules of Bankruptcy Procedure requires that a representative of the Debtors appear at the Meeting of Creditors for the purpose of being examined under oath by a representative of the Office of the United States Trustee and by any interested parties that attend the meeting. Creditors are welcome, but not required, to attend the meeting. The Meeting of Creditors may be continued or adjourned by notice at the meeting, without further written notice to creditors.

Parties & Addresses


United States Bankruptcy Court
Northern District of Illinois
219 South Dearborn
Chicago, IL 60604
T: 312-408-5000
http://www.ilnb.uscourts.gov


Caesars Entertainment Operating Company, Inc. Claims Processing Center
c/o Prime Clerk LLC
830 3rd Avenue, 9th Floor
New York, NY 10022
T: 855-842-4123


Please file proof(s) of claim, if any, via US Mail or other hand delivery system. Facsimile and other electronic delivery methods are not acceptable.  You must file an originally executed proof of claim.  If you would like a copy of your claim returned to you as proof of receipt, please enclose an additional copy and a self-addressed postage-paid envelope.

Attorneys' Addresses

Timothy W. Hoffmann
Jones Day
77 West Wacker
Chicago, IL 60601-1692
T: 312-782-3939
F: 312-782-8585
http://www.jonesday.com


Bruce Bennett
James O. Johnston
Sidney P. Levinson
Joshua Mester
Jones Day
555 South Flower Street
Los Angeles, CA 90071-2452
T: 213-489-3939
F: 213-243-2539
http://www.jonesday.com


James H.M. Sprayregen
David R. Seligman
Kirkland & Ellis LLP
300 North LaSalle
Chicago, IL 60654
T: 312-862-2000
F: 312-862-2200
http://www.kirkland.com


Paul M. Basta
Nicole L. Greenblatt
Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 10022
T: 212-446-4800
F: 212-446-4900
http://www.kirkland.com

Additional Links

For additional information about CEOC’s financial restructuring, please visit: http://www.ceocrestructuring.com

Note

Kurtzman Carson Consultants LLC ("KCC") maintains this website at the direction of Jones Day, the Proposed Attorneys for the Official Committee of Second Priority Noteholders of Caesars Entertainment Operating Company, Inc., et al. KCC maintains this website for the public's convenience and, while KCC makes every attempt to ensure the accuracy of the information contained herein, this website is not the website of the United States Bankruptcy Court and does not contain the complete, official record of the Bankruptcy Court. All documents filed with the Court are available for inspection at the United States Bankruptcy Court for the Northern District of Illinois.