Leon Black and Paul Singer got rich by outsmarting other people. For much of this year they’ve been trying to outsmart each other, Bloomberg said.
Black’s Apollo Global Management LLC and Singer’s Elliott Management Corp. battled over the fate of Caesars Entertainment Corp., the company Apollo and TPG Capital acquired in a 2008 leveraged buyout. Las Vegas-based Caesars is burdened by lackluster properties and $25.5 billion of debt – some of it owed to Elliott – that came with the deal, the report said.
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Apollo wanted to preserve its ownership stake in Caesars, while Elliott was loath to accept less than it’s owed on Caesars’s loans. The showdown was “Godzilla versus Godzilla, ” said Erik Gordon, a professor at the Ross School of Business at the University of Michigan in Ann Arbor.
On Dec. 19, Apollo signed a tentative pact with Elliott and other creditors. The parties had to overcome clashing agendas and an acrimonious history. So great was the ill will between them that when Apollo held a pivotal negotiating session at its office in Manhattan, it didn’t invite Elliott, people with knowledge of the matter said.
Caught in the middle were scores of companies holding Caesars debt, including KKR & Co., Oaktree Capital Management LP and Pacific Investment Management Co. — plus about 68, 000 Caesars employees wondering if they’d have jobs when the clash of the titans subsided, Bloomberg said.
Black, 63, is ingenious at finding ways for Apollo to come out ahead, often at the expense of creditors, according to allies and opponents – who are sometimes the same people, depending on the deal, said the report.
“We will aggressively go out and protect our investments using all the tools available to us to be able to do so, ” Kleinman said.
Singer, 70, is best known for leading the $25 billion hedge fund that bought Argentine bonds and then insisted the financially volatile country pay them in full. Elliott sued and U.S. courts ruled in its favor. The Supreme Court decided not to take Argentina’s appeal, helping to trigger Argentina’s default, its second in 13 years.
Some analysts say the latest agreement smooths the path for Caesars to begin moving toward profitability. Others say the company won’t get enough creditors to approve the deal or, if it does, will languish in bankruptcy court as creditors lob an endless series of objections, Bloomberg said.
“That’s the amazing thing about it, ” said Odell Lambroza, the head of alternative investments and co-portfolio manager at Advent Capital Management LLC in New York. “If you put 20 managers and analysts in a room, you’re going to get 20 different opinions on Caesars.”
