The high-stakes battle between hedge-fund players Leon Black and David Tepper is coming to a head.
Tepper’s Appaloosa Management and a group of bondholders are set to sue Caesars Entertainment — a move that will pit them against Black’s Apollo Global Management and TPG, The Post has learned.
The suit, which could be filed as early as Wednesday, is a bid to stop Caesars from selling four of its casinos to another Caesars-owned entity for $2.2 billion, sources said.
The sale is allegedly intended to benefit shareholders, including private-equity owners Apollo and TPG, that control both Caesars entities.
Lawyers for Appaloosa, Canyon Partners and Oaktree Capital will argue that the sale is a fraudulent transfer that would make it nearly impossible for Caesars Entertainment to pay down its $24 billion of debt.
“The onus will be on Tepper to prove wrongdoing,” one source said.
A Caesars spokesman said it hadn’t been notified of the filing of any lawsuit, while defending the company’s actions.
“There is no legitimate basis to challenge the steps we have taken to improve the long-term financial health of Caesars and will vigorously defend ourselves if any action is brought.
“Despite broad support of our actions by equity and credit markets, we are concerned that a loud minority of debt and credit default swap holders are betting against Caesars and have incentives to take actions that will injure the company, its employees and the communities in which we operate.”
A spokesman for Appaloosa didn’t return a call for comment.
Meanwhile, the company is trying to drive down the value of the bonds in Tepper’s group.
Caesars would like to buy back the roughly $3.7 billion of bonds due in 2018 for much less than their current price of 40 cents on the dollar, sources said.
“Apollo wants those bonds to go to cents on the dollar so they can scare the bondholders,” the source said.
Tepper’s group also has some cards to play. A suit could make it difficult for Caesars to win new business, such as New York state casino licenses expected to be issued this year.
The Appaloosa group last week issued a notice of default to Caesars, and filing a suit turns up the pressure.
Last year, Caesars split into two, selling off some assets not pledged to bondholders to the newly created Caesars Growth Partners for more than $875 million. It also agreed to sell four casinos to the new entity, leaving the original Caesars Entertainment with just one Las Vegas casino.
Caesars was taken private in 2008 through a $30.7 billion buyout led by Apollo and TPG.