Published Friday, Jan. 15, 2010 | 12:12 p.m.
Updated Friday, Jan. 15, 2010 | 12:58 p.m.
Harrah's Entertainment will take over the management of the Planet Hollywood resort on the Las Vegas Strip at midnight tomorrow as part of the company's longer-range plan to buy the property, Harrah's announced today.
In an internal memo to employees today, Planet Hollywood owner Robert Earl said things would be "business as usual" during the transition, though Harrah's executives from neighboring Bally's and Paris resorts will assume key roles at the property.
Harrah's will take over management from Sheraton, the hotelier that had managed the resort's non-gambling operations.
The casino giant purchased a chunk of Planet Hollywood's $870 million debt around the time the property defaulted on those loans last year.
Harrah's has accumulated more than $19 billion in debt after a 2008 leveraged buyout, a debt burden exacerbated by the recession.
The company has chipped away at its debt while it seeks to buy casinos that may be unloaded on the cheap in the downturn.
Buying Planet Hollywood makes sense for Harrah's, analysts say, because the resort is the southernmost of six major contiguous casinos the company owns to the north of the property, including Paris, Bally's, Flamingo, Imperial Palace and Harrah's.
The resort is also in good shape, relative to some older Harrah's-owned casinos, after a post-bankruptcy renovation that removed the Aladdin theme and reopened it under the Planet Hollywood brand in 2007, analysts say.
Harrah's filed an application with the state Gaming Control Board in November to acquire the property. Harrah's hopes to accomplish that by negotiating with Planet Hollywood's lenders, who have the right to foreclose on the property now that the property can't make its debt payments.
"Harrah's has been in discussions with Planet Hollywood and its lender group regarding a restructuring of the ownership of the resort," Harrah's CEO Gary Loveman said in a statement today.
Harrah's has so far kept its own lenders at bay by buying back the company's debt at a discount and paying down the loans. It also has exchanged outstanding loans for ones with higher rates and longer maturity dates.
As part of the takeover, Marilyn Winn, Las Vegas regional president overseeing Paris and Bally's, will add Planet Hollywood to her list of responsibilities. Steve Opdyke, vice president of hotel operations for Paris and Bally's, will oversee Planet Hollywood hotel operations. Shawn Ritchie, vice president of food and beverage, will oversee the resort's buffet, room service, beverage and banquets and David Hoenemeyer, general manager of Paris and Bally's, also will be involved in food and beverage operations at the neighboring resort.