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Friday, Feb. 13, 2009 | 5:13 p.m.
Sun archives
- Harrah’s makes cost-cutting moves (2-12-09)
Harrah’s Entertainment Inc. disclosed Friday it submitted requests to tap the remaining $740 million of its $2 billion senior secured revolving credit line -- a move one analyst said indicates financial troubles are deepening at the gambling giant.
The Las Vegas company, owner of Caesars Palace and other well-known properties such as the Flamingo, Bally’s, Paris and the Rio, said it requested the final $740 million "in light of the continuing uncertainty in the credit market and general economic conditions. The funds will be used for general corporate purposes, including capital expenditures.’’
Chris Snow, an analyst at CreditSights, said the disclosure indicates Harrah’s needs to hoard cash in order to meet expenses and that it might be preparing for a prepackaged bankruptcy to reorganize its debt — much like Station Casinos Inc. drew down its credit line before announcing a plan aimed at reorganizing its debt through a prepackaged bankruptcy in which key lenders would agree in advance to concessions.
Harrah’s spokesman Gary Thompson declined to comment on the possibility of a debt reorganization, calling it speculation.
Harrah’s, hit hard like the rest of the gaming industry by the recession, last fall reported having about $24.1 billion in debt — a figure that ballooned in last year’s deal that took the company private. The current amount of debt has not been disclosed. The debt level changed after an exchange offer involving about $2.1 billion in notes late last year.
For the quarter ending Sept. 30, Harrah’s said it lost $129.7 million vs. a profit a year earlier of $244.4 million. Revenue fell from $2.84 billion to $2.65 billion — and if this trend of declining revenue continued through the final quarter of 2008 and through the current quarter, Harrah’s likely would face continued financial pressure to meet its debt obligations.
The company earlier this week said it moved to cut costs by suspending matching contributions to employee retirement plans and cutting the salaries of managers eligible for bonuses.
Also today, as previously disclosed, Harrah’s reiterated it will defer the completion of about 660 rooms in the Octavius Tower expansion at Caesars Palace because of the slow economy.
Other aspects of the project will proceed as planned, including the mid-summer opening of an additional 110,000 square feet of meeting and convention space, three 10,000 square foot villas and an expanded pool and garden area.
The cost of the project, not counting the deferred rooms, is about $681 million.
harrah s use to give pretty good comps now there tight like a Crabs *ss. Personally i would play in Atlantic City at ballys ceasars and harrahs at least twice a month , Than Hit Vegas 3 or 4 times a year. Generally I play black jack buy in for any where from $500 to $ 5000 and play for a couple of hours when done all you get is like 5 to 20$ of points, also use to get free rooms alot. now hardly ever. If you want my Business and many others you guys need to be a little more generous or you will be Like Circuit city Thanks , PS i willbe in vegas next month Good Luck
I wonder if Harrah's sportsbooks are taking wagers on how long 'til the bankruptcy filing...tick tock tick tock tick tock
How many big Casinos will go dark and how many Las Vegas employees will lose their jobs with the lack of cash in visitors wallets. Now that Pres Obama has made coming to Las Vegas a corporate sin, it will be so many thousands, and then more boarded up homes to keep our city glowing. Thanks harry Reid, you a your buddies are doing a great job.
Ah, yes...half-truth Neiman is back! Do you really honestly think that the comment that the President made - that recipients of bailout money should not spend that money on corporate retreats - is really going to be the downfall of Las Vegas? Do you really think that the entire economy of the city relies on the handful of banks that received bailouts? Do you really believe that or are you seriously delusional!?
The over/under on Harrah's bankruptcy is 6 months.
The problems for Vegas began early in the Bush Administration when gaming executives leaped at the opportunity for cheap money from Wall Street, with minimal federal regulation, to fund events, personal pockets, the "Manhattenization of Vegas (don't hear that phrase right now anymore, do you), and seemingly every major company in a very consolidated industry mimicking what their direct competitors were having short term success at, i.e. continuing to erect billion dollar properties for top drawer corporate clientele and Asian traffic. This carved up the middle ground of strip room inventory.
Perhaps if the gaming tax had been a little more than 6.75 percent during this period, and thus education, healthcare and transportation had been funded a little more as they should have been during the prolonged boom, gaming corporations would not have had quite so much "record revenue" in retained earnings to pump back directly into the Strip Corridor.
Some of that money should have gone to taxes, which INDIRECTLY, would have also benefited the Strip Corridor, but first would have multiplied in effect through local jobs off the Strip, overall providing Southern Nevada with more balance in it's economy.
A well balanced community demands reasonable investment both in the public and private segments of the overall economy. Too much was invested too fast in the private, exclusive economy of the Strip Corridor, and jobs created at the margin in the Strip Corridor were jobs that went away. Those mistakes in tax structure public policy over several years make the current local economic problems worse, related to the national economic problems ongoing.
President Obama and Senator Harry Reid are part of the solution for Southern Nevada. They are certainly not the people who's leadership initiated these deep problems. For five to siz years analysts abroad, not what you read locally, have been stating Southern Nevada is setting itself up for a bust, because leaders are overlooking the economic fact that there is not enough tax structure and spending for higher education and economic diversity, and 12-15 dollar hospitality jobs DO NOT subsidize 200 dollar a square foot plus subdivisions. It's not party affiliation, it's not one gaming company vs another, it's not Jim Gibbons vs. Jim Rogers, it's quite simply just MATH.
matts7052 "Neiman...Do you really honestly think that the comment that the President made..."
Matt, it has been my experience that Neiman does not honestly think anything. He's not here for that. He's here to spill his beer on you, throw up, and then not hear your response to it.
Sometimes I wonder if his computer only has a keyboard.
Great post Gregory.
If you just think about this little thing: The Jockey Club, just next to the Bellagio, used to be a and independent place. A building that refused to be sold to the BIG MGM MACHINE. What happened whas that the City Center was built in a way that the Jocky Club is basically ducked in between now. Squeezed in, all sun light has been sucked away from the building, the Jockey Club is in the shadow of the big City Center. What a shame. In my country, there are regulations that prohibit construction in that way so the exisiting building needs to be standing in distance to another building and leave enough light, room , space, garden, or whatever. Vegas doesn't seem to know such rules of respect and common sense. I don't know if the Jockey Club has shut down yet or not. Eventually it will. Whoever lives in there must feel like being in a mouse trap! Shame on MGM Mirage!!!
HARRAH'S USED TO GIVE OUT FREE DRINKS IN THE SPORTSBOOKS BUT NOW THE MIESER'S CHARGE $6 FOR A BEER GO TO CASINO ROYAL AND GET THEM FOR $1.50 AND $50 TO SEE RIDA RUDNER I'D RATHER WATCH PAINT DRY WHOEVER GIVES THESE ENTERTAINMENT CONTRACTS OUT SHOULD BE FIRED HOW BOUT PUTTING A BOXING RING IN THE CARNIVAL COURT SO WE CAN SEE RITA RUDNER N BETTE MIDLER FIGHT FOR THERE OVERPAID CONTRACTS
The Jockey Club is not in the shadows of the CityCenter. The bulding next to the Jockey Club is the Cosmopolitan Resort and Casino and it's NOT owned by the BIG MGM MACHINE. BorisR, you need to get facts straight. The Jockey Club is a timeshare and is owned by over 20,000 people. No one stays there but just a week a year. The Cosmopolitan will refurbish the exterior of the Jockey Club and allow the timeshare owners free parking, along the use of the Cosmopolitan swimming pools. At one time, the owner of the Cosmopolitan wanted to buy the Jockey Club, but decided it would be too difficult to buy out 20,000 owners. Also, if you don't by now...the Cosmopolitan was foreclosed on and was taken over by Deutsche Bank. They will complete the project and sell it to a new owner when the market improves.
TrueBlue, sorry for that misunderstanding. Didn't know that Citicenter and Cosmopolitan is 2 different things. To me, this whole construction thing looks like a master chaos of cranes and half finished buildings. I was just shell shocked when I saw the Jockey Club squeezed in between these buildings, leaving barely enough air to breethe.
But thanks anyway for your inputs :)
Ya Gregory, Obama and Reid are part of the "Final Solution" for Vegas.
http://www.politico.com/news/stories/020...
Interesting how Gregory seems to think raising taxes on one specific industry would have made things so much different. The housing market bubble was caused by supply and demand. How many of you knew people who were signing multiple contracts with builders and creating a false shortage of homes in Las Vegas. I personally knew at least a dozen who bought at least 2 houses and some 3 or more. I also knew of multiple people who were buying 500k homes with 60k jobs. And why think gaming revenue tax should pay for all the services you mention Gregory? Property taxes account for the biggest portion of education budgets. When the value of homes in the valley doubled during the bubble the biggest concern of homeowners was that they didn't want their property taxes to go up. The cause of our current economic conditions is called GREED.