Subsequent Events

As disclosed in greater detail in CEC’s Current Report on Form 8-K filed on May 6, 2014 with the Securities and Exchange Commission, and as amended on May 8, 2014, as part of its continued focus on its capital structure, Caesars, certain of its direct and indirect subsidiaries, including CEOC, and CGP LLC entered into several agreements and transactions or proposed transactions subsequent to March 31, 2014. The following is a summary of those subsequent events.

Amendment to Transaction Agreement

On May 5, 2014, Caesars, CAC, CGP LLC, and CEOC and certain of those entities' subsidiaries amended the definitive agreement governing the CEOC-CGP LLC Property Transaction, as described in Note 5, "Property Transaction with CGP LLC and Related Financing." Pursuant to the terms of the amended agreement, CGP LLC acquired the Nevada Properties and 50% of the ongoing management fees and any termination fees payable under the property management agreements from CEOC for an aggregate purchase price of $1,340.0 million, minus assumed debt and other closing adjustments. Pursuant to the terms of the amended agreement, CGP LLC also agreed to acquire from CEOC Harrah’s New Orleans, subject to obtaining the approval from the Louisiana Gaming Control Board to purchase such property and 50% of the ongoing management fees and any termination fees payable under the Property Management Agreement to be entered between a Property Manager for an aggregate purchase price of $660.0 million, minus outstanding debt to be assumed in a second closing and other closing adjustments.

The CEOC-CGP LLC Property Transaction Credit Agreement ("Term Facility")

On May 6, 2014, CGP LLC funded the purchase price of the first closing of the CEOC-CGP LLC Property Transaction with cash on hand and the proceeds of $700.0 million of term loan financing obtained by Caesars Growth Properties Holdings, LLC, an indirect subsidiary of CGP LLC. This term loan matures on May 5, 2015, with a borrower option to extend the initial maturity date for one additional year in exchange for a fee. Repayment in full is required upon the second closing and the release of certain indebtedness required to fund such acquisition from escrow.

Borrowings under the Term Facility bear interest at a rate equal to either (a) a LIBOR-adjusted rate, subject to a floor of 1.00% or (b) a base rate determined by reference to the highest of various benchmark rates, as adjusted and plus an applicable margin. CGP LLC and the material, domestic wholly owned subsidiaries of the borrower (subject to exceptions) have guaranteed the amounts borrowed. The amounts borrowed are secured by substantially all of the existing and future property and assets of the borrower and the guarantors (other than Parent, whose guarantee is unsecured), including pledges of certain capital stock of direct and indirect subsidiaries of CGP LLC.

The Term Facility requires the borrower to prepay outstanding term loans, subject to certain exceptions and conditions, with 50% (subject to certain adjustments) of the borrower’s annual excess cash flow, 100% of the net cash proceeds of certain asset sales or dispositions, and 100% of the net cash proceeds of any issuance or incurrence of debt, other than proceeds from debt permitted under the Term Facility.

Bally’s Las Vegas and The Quad were mortgaged under the Term Facility. The Cromwell was not be mortgaged but the Term Facility is secured by an indirect pledge of the equity interests of the subsidiary of the borrower that holds The Cromwell.

The Term Facility contains various requirements, including the requirement of the Borrower to meet specified leverage ratios in order to take certain actions, such as incurring certain debt or making certain restricted payments. In addition, the Term Facility includes customary negative covenants, subject to exceptions, restricting or limiting the borrower’s ability and the ability of its restricted subsidiaries to take certain actions.

Sale of CEOC Common Stock

On May 5, 2014, Caesars Entertainment completed the sale of 68.1 shares of CEOC’s unregistered common stock to certain qualified institutional buyers. Caesars Entertainment received an aggregate purchase price of $6.15 million for the CEOC shares. The CEOC shares were offered pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended. As of May 5, 2014, after giving effect to this sale, Caesars Entertainment owns approximately 95% of CEOC's common stock. Upon completion of the sale, Caesars Entertainment’s guarantee of CEOC’s outstanding secured and unsecured notes was automatically released. CEOC did not incur any expenses in connection with, and will not receive any proceeds from, this sale. Caesars Entertainment intends to use the net proceeds from the sale for general corporate purposes.

Announced Tender Offers

On May 6, 2014, Caesars Entertainment announced that CEOC will launch cash tender offers for any and all of the $791.8 million face value of its 5.625% Senior Notes due 2015 and any and all of the $214.8 million face value of its 10.00% Second-Priority Senior Secured Notes due 2015, subject to financing and other conditions. In addition, CEOC has entered into note purchase agreements with a significant third-party holder and a subsidiary of CGP LLC to purchase $746.4 million in aggregate principal amount of the 5.625% Senior Notes for $782.8 million, and $108.7 million in aggregate principal amount of the 10.00% Senior Secured Notes for $111.1 million. The closing of these purchases is conditioned upon, among other things, CEOC receiving sufficient amount of net cash proceeds from the issuance of the Incremental Term Loans (as defined below) to refinance all of its existing indebtedness that matures in 2015. In addition, in respect of the purchase of notes held by a subsidiary of CGP LLC, CGP LLC has agreed to reinvest all of the proceeds received from such purchase in the Incremental Term Loans, as defined below.

Bank Transactions

On May 6, 2014, CEOC announced that it is seeking to raise $1,750 million of new incremental term loans (the "Incremental Term Loans") under its senior secured credit facilities, with an anticipated maturity of March 1, 2017. We anticipate $1,450 million (subject to certain adjustments) of the Incremental Term Loans to be incurred prior to the effectiveness of the Bank Amendment (referred to below), and certain institutions have indicated a willingness to backstop a portion of the Incremental Term Loans. If the Bank Amendment is successful, CEOC intends to incur an additional $300 million (subject to certain adjustments) of the Incremental Term Loans. CEOC intends to use the net cash proceeds from the Incremental Term Loans to refinance its existing indebtedness that matures in 2015 and existing term loans. Lenders providing the initial $1,450 million of the Incremental Term Loans will support the proposed Bank Amendment described below.

CEOC also announced its intent to seek amendments to its senior secured credit facilities which would, if amended provide for the following (collectively, the "Bank Amendment"):


(i)	modify the financial maintenance covenant to increase the leverage ratio level;


(ii)	exclude the Incremental Term Loans incurred after March 31, 2014 from the definition of "Senior Secured Leverage Ratio" for purposes of such covenant;


(iii)	modify CEC’s guarantee under the senior secured credit facilities such that CEC’s guarantee will be limited to a guarantee of collection with respect to obligations owed to the lenders who consent to the Bank Amendment; and


(iv)	modify certain other provisions of the senior secured credit facilities.

In addition, CEOC intends to repay up to $400 million of outstanding term loans held by consenting lenders at par if the Bank Amendment is successful. The proposed Bank Amendment is subject to required regulatory approvals and market and other conditions, including applicable lenders’ consent, and may not occur as described in this report or at all.