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October 21, 2014

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Harrah’s working on plan to take over Planet Hollywood

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Tom Donoghue/www.donoghuephotography.com

Planet Hollywood’s Westgate Tower.

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Harrah's Entertainment Inc.'s chief executive officer confirmed to employees Wednesday that the company is interested in acquiring the Planet Hollywood resort on the Las Vegas Strip.

In an internal e-mail, CEO Gary Loveman told employees of the company's interest, Harrah's spokeswoman Jacqueline Peterson said.

"The Planet Hollywood resort sits adjacent to the Paris Las Vegas Hotel & Casino, currently the southernmost of six contiguous Harrah's-owned properties on the east side of the Las Vegas Strip,'' Loveman's e-mail said.

"The Planet Hollywood resort is currently in default to its lenders. As a result of our purchase of their debt, we are working on a plan that also would allow Harrah's to own and manage the property. This is an attractive proposition because of Planet Hollywood's proximity to our other resorts on the Strip, its high-quality product offering and its strong brand name.''

"This move is the latest example of our strategy to make purchases or acquisitions capitalizing on opportunities created by current economic conditions. I look forward to sharing more details with you about this project in the future,'' the e-mail said.

Harrah's, according to the Wall Street Journal, had already purchased some $140 million of the debt of Planet Hollywood through mid-September.

Peterson said the company hasn't confirmed how much of the debt it now holds.

The 2,518-room Planet Hollywood on Nov. 16 reported a $17.5 million quarterly loss and disclosed that lenders had taken control of its finances after it defaulted on debt obligations that total $870 million.

The hotel-casino is across the street from CityCenter and, like other properties on the Strip, has already suffered from the decline in travel to Las Vegas.

One of Harrah's parent companies, Apollo Global Management LLC, had shown interest in the stalled Fontainebleau resort in Las Vegas, but Apollo hasn't made an offer for Fontainebleau.

Despite Harrah's hefty debt load of $19.3 billion, its corporate parents Apollo and TPG Capital (Texas Pacific Group) are considered to have deep pockets and financing likely wouldn't be an issue for Harrah's should it pursue the Planet Hollywood or Fontainebleau deals.

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