Company checks off on New Orleans plan

Tuesday, Jan. 16, 2001 | 11:27 a.m.

Harrah's Entertainment Inc. said its board approved plans to reorganize the holding company of Harrah's New Orleans.

Under the plan proposed by JCC Holding Co., Harrah's stake in the New Orleans casino will increase from 43 percent to 49 percent, in exchange for debt written off by Harrah's. Harrah's has previously said it expects to record about $200 million in write-offs associated with the bankruptcy.

About $500 million in JCC debt will be eliminated, and bondholders and bank lenders will be given 51 percent of the casino. Harrah's will also provide or guarantee a $35 million revolving credit facility to the reorganized company. Harrah's will hold $50 million of the restructured company's $125 million in debt.

The plan also calls for the casino's annual tax payment to the state of Louisiana to be reduced from $100 million to $50 million, increasing to $60 million in the second year. These payments would be guaranteed by Harrah's for the first four years, even if the casino closes. JCC's lease payments of nearly $22 million per year to the city would also be reduced by $5 million per year, and the casino would be permitted to add both hotel rooms and restaurants, Harrah's said.

Harrah's management fee will change from 3 percent of the casino's net revenue to 30 percent of the casino's cash flow. Harrah's will also appoint three of JCC's seven board members.