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Thursday, Aug. 12, 2010 | 5:11 p.m.
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- Major investor bets big on Vegas (6-12-2010)
Casino operator Harrah's Entertainment Inc. filed papers with federal regulators on Thursday to publicly trade a nearly 10 percent stake that's now owned by the New York-based hedge fund run by billionaire John Paulson.
The Las Vegas-based company told the Securities and Exchange Commission that Paulson & Co. Inc. intends to sell its 9.9 percent stake as soon as possible.
But the papers filed aren't a primary offering by Harrah's, and the company warned it has not yet applied to list the stock and isn't required to do so under the deal made with Paulson for the stake.
Harrah's said in the filing that it will try to list the shares, but it can't guarantee there will be demand for them.
Harrah's makes nearly one-third of its revenue in Las Vegas but owns or manages more than 50 casinos in six countries.
Paulson acquired the stake in June in exchange for $710 million in debt from the world's largest gambling company.
Apollo Global Management LLC and TPG Capital LP will retain their combined 89.3 percent stake in Harrah's.
Their holding leaves Harrah's a "controlled company," so it will remain outside the purview of portions of federal corporate governance laws and won't have to include independent directors on its board. The papers filed Thursday aren't a primary offering by Harrah's.
A spokeswoman for Harrah's declined comment, saying the company is in a quiet period.
The June deal was part of a $1.12 billion transaction that gave an additional 5.7 percent equity interest to Apollo and TPG for $408 million in debt.
They are the same firms that took Harrah's private in January 2008.
Harrah's said Paulson, Apollo and TPG agreed to buy $835 million worth of notes due between 2015 and 2017 for $557 million as part of the exchange. They also exchanged nearly $283 million in other notes they had bought on the open market or during prior tender offers.
Harrah's has said it plans to use the $557 million in cash to help its balance sheet, make investments and cover general corporate purposes.
Part of Paulson's deal with the company still needs approval from regulators in Nevada, New Jersey and other jurisdictions, who require those with at least a 5 percent stake in a gambling company to apply for a gambling license.
Harrah's has said it anticipates the deal to close during the fourth quarter or in next year's first quarter.
It disclosed Thursday that it had $19.3 billion in long term debt as of March 31.
I can't help recalling that back in June every pundit and cheerleader in town was gushing over Paulson's supposed faith in the long-term future of Harrah's and, by extension, LV in general.
Oops, maybe not.
Probably will be a good stock to short.
Harrahs has 19 Bil in debt and goes after the low end customer which I am ok with but provides no customer service and a product besides Caesars that is like a Motel 6. I would think 90 percent of the poeple who work for that company are so unhappy. What used to be a great biz to work in has been destroyed by this single Wal-Mart of gaming. So Sad!!!!
What the story did not mention was in October Harrahs is changing
their name to Ceasars Entertainment.
This weeks Bloomberb Businessweek Magazine
has a great four page story on Gary Loveman.
How he looks at the customer and the employees.
Keep your eyes open and your hand on your wallet. To sell their shares as quickly as possible implies that they are out to make a fast buck at the blind investors expense.
John Paulson, king of short-sellers, also owns large chunks of MGM and Boyd. He bought his Harrah's stake for pennies on the dollar, and people will soon learn how little the company is now valued.
Sounds like Paulson is ready to cut and run from Harrah's, flooding the market with more casino stock.
Will Paulson pull out of MGM and Boyd just as quickly?
Tom Shermspun
The Great Ruins of Las Vegas Tour (on Facebook)
Who doesn't want to buy into $19B debt? Harrahs can make even more money by paying even odds on blackjack. They don't think they'll lose gamblers that way, just increase revenue. And dividends should be great if they can just let go of the salaries of those last few people maintaining the properties...
No matter how cheap this stock will be I am not going to buy into. Very soon it will be traded on the Pink Sheet counter, just like the Riviera Holdings Corp.
This is another effort to raise capital for free from idiotic speculators following a pipe dream. Shouldn't even be allowed to go even partially public if a company this kind drags this kind of debt load around!
From Switzerland