The Wall Street Skinny

40. Distressed Debt and Restructuring 101: Caesars Palace Coup (Part II)

Dec 23, 2023

In this podcast, Sujeet Indap and Max Frumes, authors of the book Caesars Palace Coup, discuss the distress-for-control maneuvers and questionable asset transfers that Apollo spearheaded after the $30bn Leveraged Buyout of Caesars in 2008. They explore the showdown between Private Equity titans and creditors, highlighting the manipulation of legal and capital structures. Other topics include holiday plans, dealing with water damage, LBO structure, capital structure and risk in investments, Apollo's influence, Opco's financial struggles, and strategies in taking on Apollo in a distressed debt and restructuring situation.

58:38

Episode guests

Sujeet Indap and Max Frumes'

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Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Private equity firms utilized various strategies to address the financial challenges faced by Caesars Palace after a leveraged buyout in 2008, including cost-cutting, debt restructuring, and asset transfers.

The dispute and legal battle between creditors, including hedge funds and private equity firms, intensified as alliances were formed and broken, shaping the outcome of the Caesars Palace restructuring saga.

Apollo and TPG successfully acquired junior mortgage debt at a discount, which they converted into a controlling equity position in Planet Hollywood casino, showcasing a common practice in distress and debt investing.

Deep dives

Financial challenges and restructuring efforts

The podcast episode discusses the financial challenges faced by Caesars Palace after a leveraged buyout closed in 2008. The private equity firms involved, Apollo and TPG, implemented various strategies to address the mounting debt, including cost-cutting measures and restructuring deals. These efforts included buying back debt at a discount and offering new debt with extended maturities. However, these actions caused a strain on the company's operations, leading to reduced revenues and negative impacts on brand loyalty and customer service. Despite their attempts, Caesars Palace continued to struggle financially, with the debt-to-EBITDA ratio skyrocketing and bankruptcy looming.

Introduction

3min

Holiday Plans and Bahamas Family Getaway

3min

Dealing with Water Damage and Basement Issues

2min

The Structure of the LBO and Kim Kardashian Analogy

2min

Capital Structure and Risk in Investments

19min

Apollo's Influence and Fraudulent Conveyance

7min

The Financial Struggles of Opco

19min

Challenges and Strategies in Taking on Apollo and Manipulating the Legal System

2min

Send us a text

In Part II of this three-part case study of Sujeet Indap and Max Frumes' book Caesars Palace Coup, we pick up in 2008 after Apollo and TPG's $30bn Leveraged Buyout of Caesars closed. With the economy immediately taking a nosedive, Apollo spearheaded a series of restructurings to stave off bankruptcy. These restructurings ranged from more vanilla "distress-for-control" maneuvers to extremely questionable, cloak-and-dagger asset transfers and severing of guarantees. These ultimately culminated in a showdown between the titans of Private Equity and the creditors they'd effectively superseded through expert manipulation of Caesars' legal and capital structures.

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The Wall Street Skinny

40. Distressed Debt and Restructuring 101: Caesars Palace Coup (Part II)

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Financial challenges and restructuring efforts

Apollo maneuver and creditor dispute

Tension between private equity and hedge funds

Apollo and TPG acquire junior mortgage debt of Planet Hollywood at a discount

Caesar's bankruptcy and the creation of Caesar's Growth Partners

Remember Everything You Learn from Podcasts