Caesars Entertainment and Caesars Acquisition amend merger agreement

By Caroline Salls

Pittsburgh, July 11 – Caesars Entertainment Corp. and Caesars Acquisition Co. agreed to amend the terms of their proposed merger, according to a news release.

The companies said the amended and restated merger agreement represents an important milestone in the ongoing restructuring of Caesars Entertainment Operating Co., Inc. (CEOC), as the restructuring is contingent upon the completion of the merger.

Merger deal changes

According to an 8-K filed with the Securities and Exchange Commission, the changes to the merger agreement include the following:

• The exchange ratio, under which shares of Caesars Acquisition class A common stock and class B common stock will be become exchangeable for shares of Caesars Entertainment’s common stock, was amended to ensure that holders of Caesars Acquisition common stock immediately before the closing of the merger will receive 27% of the outstanding Caesars Entertainment common stock before conversion of the new convertible notes.

The exchange ratio may be adjusted, and any adjustment will be determined on the earlier of the date on which the special committees of Caesars Acquisitions and Caesars Entertainments boards of directors agree in writing to the ratio and the sixth business day following the end of the adjustment period.

The exchange ratio may be adjusted solely to take into account tax costs and tax attributes. However, if at any time during the adjustment period the special committees determine that they cannot obtain a fairness opinion from their financial advisers as a result of an adjustment to the exchange rate or an adjustment would not be advisable, the parties will consider the relevant facts.

If the special committees are unable to agree to an adjustment to the by the end of the adjustment period or have not received a required opinion from an independent financial adviser, the amended merger agreement may be terminated within five business days following the end of the adjustment period;

• The amended merger agreement contains an amended “go-shop” provision on terms substantially the same as in the original agreement, However, the amended merger agreement also provides that specified litigation, legislative changes and changes in the financial or securities markets will not provide cause for either entity’s board to complete an adverse recommendation change;

• Caesars Acquisition and Caesars Entertainment agreed that the sale of all or any part of the businesses or properties of Caesars Interactive Entertainment, Inc. (CIE) will be subject to the approval of the Caesars Entertainment special committee; and

• The amended agreement eliminated from the original minimum cash closing conditions for both parties and a closing condition that limited tax costs related to the restructuring to close the merger.

Caesars Acquisition and Caesars Entertainment stockholders will be asked to vote on the adoption of the amended merger agreement at yet-to-be-scheduled special meetings.

The merger is required to be completed by the close of business on Dec. 31, 2017.

Other agreements

In connection with the amended and restated merger agreement, Caesars Entertainment and Caesars Acquisition also amended their restructuring support agreements with CEOC, and each entered into a voting support agreement in connection with the proposed merger with affiliates of Apollo Global Management, LLC and TPG Capital, LP.

Caesars Entertainment and CEOC are continuing discussions with remaining creditor groups to achieve consensual agreements, the release said.

As previously reported, CEOC’s plan confirmation hearing is scheduled for Jan. 17, 2017.

Caesars is a Las Vegas-based casino-entertainment company that filed for bankruptcy on Jan. 15, 2015 in the U.S. Bankruptcy Court for the Northern District of Illinois. The Chapter 11 case number is 15-01145.

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