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Caesars backed on bankruptcy

Casino operator Caesars Entertainment Corp., owner of Caesars, Bally's, and Harrah's Resort in Atlantic City and Harrah's Philadelphia in Chester, has won the necessary support for a plan to put its biggest unit into bankruptcy as soon as Thursday.

Casino operator Caesars Entertainment Corp., owner of Caesars, Bally's, and Harrah's Resort in Atlantic City and Harrah's Philadelphia in Chester, has won the necessary support for a plan to put its biggest unit into bankruptcy as soon as Thursday.

The restructuring plan has the support of more than 67 percent of first-lien bondholders, the Las Vegas-based company said late last week.

A bondholder group that had already agreed to the restructuring has bought $500 million of debt from BlackRock Inc., according to two people with knowledge of the matter.

Caesars, owned by Apollo Global Management L.L.C. and TPG Capital, had been negotiating with creditors for four months on a plan to reorganize Caesars Entertainment Operating Co., the subsidiary that owns most of its casinos. Its proposal would restructure $18.4 billion of debt by putting the unit into bankruptcy and turning it into a real estate investment trust.

Under the proposed real estate investment trust model, adopted by Penn National Gaming Inc. and its spin-off Gaming & Leisure Properties Inc. in 2013, the casinos would be owned by one company while another would operate them.

Of Caesars' casinos in Pennsylvania and New Jersey, only Harrah's Atlantic City, where it is spending $134 million on a center for corporate meetings, would be spared the trip into bankruptcy court under the restructuring.

Harrah's Atlantic City is part of Caesars Entertainment Resort Properties L.L.C., which also includes five Nevada casinos. Analysts have said that group has better prospects.

Caesars needed 60 percent of its first-lien bondholders to sign onto the plan by Monday under the terms of a deal struck with some creditors last month. Under U.S. bankruptcy code, it needed two-thirds of the bondholders to commit to its strategy before it can implement it in court.

Hedge fund Elliott Management led the debt purchase and corralled orders from others among the 18 senior bondholders that had signed the bankruptcy plan, said the sources, who asked not to be identified because the transaction was private.

The group outbid a rival faction represented by law firm Debevoise & Plimpton L.L.P. that is seeking more money from Caesars in a restructuring, said one of the sources and another person with knowledge of the matter.

Caesars has proposed giving first-lien bondholders 93.8 cents on the dollar. Citigroup managed the sale of the notes.

Spokesmen for BlackRock, Elliott, and Citigroup declined to comment. My Chi To, an attorney at Debevoise representing the rival group, also declined to comment.

Last month, BlackRock dropped out of the group of first-lien holders that purchased the bonds last week. It exited restructuring talks along with Caesars' highest-ranked lenders, who have not reached an agreement on how to restructure the company's largest subsidiary.

In Wilmington on Friday, some bondholders informed a judge that they will continue their fraud lawsuit against Caesars.