Subsequent Events

On October 6, 2017, the transactions described in Note 1 were consummated as further described below.

Merger with CAC

As described in Note 1, pursuant to the Merger Agreement, among other things, CAC merged with and into CEC, with CEC as the surviving company and each share of CAC common stock issued and outstanding immediately prior to the Effective Date were converted into, and became exchangeable for, 1.625 shares of CEC common stock on the Effective Date, which resulted in the issuance of 226 million shares of CEC common stock. As described in Note 15, Hamlet Holdings beneficially owned a majority of both CEC’s and CAC’s Common Stock immediately prior to the Merger. Therefore, the Merger will be accounted for as a transaction among entities under common control, which will result in CAC being consolidated into Caesars at book value as an equity transaction for all periods presented after elimination of all intercompany accounts and transactions.

Summary of Merger as of October 6, 2017

(In millions)	Total Value
Add: assets acquired ⁽¹⁾	$	152
Less: liabilities assumed	(96		)
CEC’s noncontrolling interest in CGP	1,751
Net book value acquired	$	1,807

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⁽¹⁾	Amount is reported net of CAC’s equity investment in CGP as this will be eliminated in consolidation.

CEOC’s Emergence from Chapter 11 Bankruptcy

Settlement of Accrued Restructuring and Support of Expenses

As described in Note 1, we accrued certain obligations described in the Plan and the RSAs that were estimable in accrued restructuring and support expenses on the Balance Sheets. These obligations were settled on the Effective Date, as summarized in the table below.



(In millions)	Amount
Cash consideration	$	1,840
Issuance of CEC common stock⁽¹⁾	4,507
Issuance of CEC Convertible Notes	2,240
Issuance of PropCo Call Right	189
Total settled	$	8,776

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⁽¹⁾

Based on 420 million shares of CEC Common Stock issued at a closing stock price of $12.80 on October 6, 2017, and 146 million shares of CEC Common Stock that were repurchased at a fixed price of $6.86 under the terms of Plan (See Note 1). This represents the residual amount of shares remaining after allocating a portion of the total shares required to be issued under the Plan to the acquisition of New CEOC (described below).

Acquisition of New CEOC

In accordance with the Plan, CEC completed the acquisition of all of New CEOC using a combination of cash consideration and CEC Common Stock. The acquisition was accounted for under ASC 805, Business Combinations, with CEC considered the acquirer of New CEOC, which requires, among other things, that the assets acquired and the liabilities assumed be recognized on the balance sheet at their fair values as of the acquisition date. The excess of the purchase price over the net fair value of the assets and liabilities will be recorded as goodwill. The total value of the consideration was approximately $2.5 billion, composed of the following:

Composition of Acquisition Consideration

(In millions)	Value
Cash for New CEOC Equity	$	700
CEC Common Stock for New CEOC Preferred Equity ⁽¹⁾	1,815
Total consideration	$	2,515

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⁽¹⁾	Based on 142 million shares of CEC Common Stock issued at a closing stock price of $12.80 on October 6, 2017.

The following table summarizes the preliminary values of assets and liabilities recognized as part of the acquisition. We will continue to evaluate and value identifiable assets acquired, liabilities assumed, and contingent consideration, and that may require the preliminary purchase price allocation to be adjusted. The preliminary determination of assets and liabilities recognized is based on a number of estimates and assumptions; actual amounts could differ from these estimates.

As part of the Plan, certain real estate assets were sold to PropCo and leased back to New CEOC. CEC determined that the transaction does not qualify for sale-leaseback accounting based on the terms of the lease agreements; therefore, the Company will be accounting for the transaction as a financing. Payments associated with the lease agreements will be approximately $640 million in the initial lease year. A portion of the periodic lease payment will be recognized as interest expense, with the remainder of the lease payment reducing the failed sale-leaseback financing obligations using the effective interest method.

In addition, on the Effective Date, New CEOC entered into a $1.2 billion credit agreement (the “New CEOC Credit Agreement”) to fund its obligations under the Plan.

Preliminary Purchase Price Allocation

(In millions)	Fair Value
Assets acquired:
Property and equipment, net	$	8,892
Intangible assets other than goodwill	1,171
Other current and non-current assets	1,660
Total assets	11,723
Liabilities assumed:
New CEOC Credit Agreement	(1,235		)
Other long-term debt	(381		)
Failed sale-leaseback financing obligations	(8,370		)
Other current and non-current liabilities	(1,387		)
Total liabilities	(11,373		)

Noncontrolling interests	21

Goodwill	2,144

Total consideration	$	2,515

The Company will recognize certain deferred tax assets and liabilities resulting from (i) net operating loss carryforwards (“NOLs”) available to CEC after completing the Merger and reorganization of CEOC under the Plan and (ii) differences between the fair value of the assets and liabilities and their respective tax bases. Due to CEC’s recent history of losses, CEC will continue to record a valuation allowance against the excess deferred tax assets that are not offset by deferred tax liabilities. Deferred tax liabilities of $348 million are included in Other current and non-current liabilities in the preliminary purchase price allocation. CEC is currently evaluating but estimates that it could have up to $3 billion of federal NOLs available for carryover to future periods after completing the Merger and reorganization of CEOC under the Plan. Ultimately, the amount of the federal NOLs available for carryover to future years is dependent on the 2017 actual results for CEC and its subsidiaries, the tax attribute reduction provisions applicable to taxpayers involved in Chapter 11 bankruptcy proceedings, and other information not available as of the determination of the preliminary purchase price allocation. Any NOLs that are carried over to future periods will be subject to limitations on their ability to offset future taxable income under Section 382 of the Internal Revenue Code.

On the Effective Date, the Company was obligated to pay $126 million related to directors and officers’ insurance policies, which was recovered from its insurance carriers during the fourth quarter.

Pro Forma Financial Information

The following unaudited pro forma financial information is presented to illustrate the estimated effects of the Merger and the acquisition of New CEOC as if they had occurred on January 1, 2016.



	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2017			2016			2017			2016
Net revenues	$	2,130		$	2,111		$	6,275		$	6,315
Net loss	(601		)	(543		)	(2,614		)	(3,038		)
Net loss attributable to Caesars	(598		)	(512		)	(2,614		)	(3,018		)
Basic and diluted loss per share	(0.85		)	(0.73		)	(3.72		)	(4.29		)

CGPH and CERP Transactions

CGPH and CERP Merger

After obtaining all required regulatory approvals, CERP will merge with and into CGPH, with CGPH as the surviving entity, to be renamed to Caesars Resort Collection, LLC (“CRC”), which will then be a wholly owned subsidiary of CEC.

CGPH and CERP Financing Transactions

On October 16, 2017, CRC Escrow Issuer, LLC, and CRC Finco, Inc., two wholly owned subsidiaries of CEC, issued $1.7 billion aggregate principal amount of 5.25% senior notes due 2025 (the “CRC Notes”). The gross proceeds of the CRC Notes will be held in escrow until the date certain escrow conditions are satisfied, including the merger of CERP and CGPH, whereby CRC will become a co-issuer of the CRC Notes. If the escrow conditions are not satisfied, the CRC Notes are subject to a special mandatory redemption.

CRC also plans to enter into new senior secured credit facilities (the “CRC Senior Secured Credit Facilities”), comprised of (i) a $1.0 billion senior secured revolving credit facility maturing in 2022 and bearing interest at LIBOR plus 2.25% (the “CRC Revolving Credit Facility”) and (ii) a $4.7 billion senior secured term loan credit facility maturing in 2024 and bearing interest at LIBOR plus 2.75% (the “CRC Term Loan Facility”).

Once the funds are released pending final regulatory approvals, we will use the net proceeds of the CRC Notes and the CRC Term Loan Facility, as well as available cash and borrowings under the CRC Revolving Credit Facility, to repay substantially all outstanding debt of CERP and CGPH. The CRC Term Loan Facility will incur fees at a rate of 1.375% beginning in November 2017, increasing to 2.75% beginning in January 2018 (if applicable) until the funds are released from escrow.

We expect to incur a loss on extinguishment in the fourth quarter of 2017 due to the write off of aggregate unamortized discounts and deferred finance charges at CERP and CGPH of approximately $45 million and $33 million, respectively. In addition, CERP will incur approximately $131 million in call premiums as part of the extinguishment of the CERP Notes.