Caesars Entertainment Corp delivered an unusual bounty to its private equity owners when it struck a $5 billion deal last week to exit its casino operating unit's costly bankruptcy: They keep part of their investment.

Under the proposed agreement, shareholders Apollo Global Management and TPG Capital Management LP could emerge with a 16 percent collective stake in a new restructured Caesars, worth roughly $500 million.

The Sept. 27 deal was previewed in a 2012 internal Apollo memorandum which outlined how the funds would be able to have their "cake and eat it too" if Caesars went belly up.

Typically, in the largest U.S. corporate bankruptcies shareholders are wiped out if creditors are not paid in full. Caesars creditors are receiving billions less than what they are owed.

"This is definitely outside the norm," Israel Shaked, a professor at the Boston University School of Management who has worked as a restructuring advisor, said about the shareholders maintaining a stake.

To be sure, Apollo and TPG are walking away with much less than they would have under prior settlement offers, which were firmly rejected, and they are surrendering their stock in the Caesars parent, which is worth about $950 million.

Caesars and Apollo declined to comment.


Apollo and TPG gained control of the casino empire in 2008 in a $30 billion leveraged buyout for Harrah's Entertainment, which they then renamed.

Apollo, TPG and co-investors sank $6 billion into the deal, just as the golden age of mega-buyouts peaked and the U.S. economy tipped into a deep recession.