Harrah’s Entertainment, which owns the rights to the annual World Series of Poker (WSOP), has canceled its initial public offering, or IPO, according to a statement released by the company on Friday. The fairly short announcement read, “Harrah’s Entertainment, Inc. today announced that it is not pursuing its initial public offering of common stock at this time due to market conditions.”
According to the New York Times, shares of Harrah’s Entertainment were slated to be in the $15 to $17 range, resulting in over a half-billion dollars for the casino giant. The two firms that took Harrah’s private in 2008, TPG Capital and Apollo Global Management, did not appear to be giving up any of their shares in the process. Shortly after the privatization of the company, the global economy sank into the worst recession in nearly 100 years.
The Financial Times shed more light on the reason for Harrah’s scrapping its IPO: “Senior bankers said they thought Harrah’s had asked for too high a price given its prospects and circumstances. Apollo and TPG had managed to extend the duration of the debt used in the buyout, they said, but Harrah’s remains highly leveraged and the prospect for economic recovery remains uncertain.”
On Thursday, General Motors issued an IPO that raised over $20 billion for the longstanding car manufacturer as part of a rebuilding process. CNBC detailed that the first day of trading was anything but light for GM: “By early afternoon, more than 165 million shares had traded, more than triple the amount of trading in Citigroup, the next most actively traded stock.” GM’s stock closed trading on Friday at $34.26 per share, up 0.2% on the day. The company’s IPO was set at $33 and shares jumped 4% during the opening day of trading.
An article that appeared in Business Week on Friday explained that Harrah’s burgeoning debt contributed heavily to its failed IPO: “The most successful IPOs this year are from companies that show revenue growth, higher profits (or at least shrinking losses), and manageable debt.” In February, Harrah’s acquired Planet Hollywood on the Las Vegas Strip and now owns a variety of Sin City casinos, including the Rio, Paris, Bally’s, O’Sheas, Imperial Palace, Caesars Palace, and the Flamingo.
Harrah’s acquired the rights to the WSOP in 2004. One year later, the WSOP’s preliminary events were shuttled across town to the Rio, while the Main Event’s conclusion took place in Downtown Las Vegas at Binion’s. Starting in 2006, the entire WSOP schedule emanated from the Rio’s massive convention center, which includes the Pavilion and Amazon Room. Rumors continually persist that Harrah’s, which has been attempting to sell the Rio, would take the annual WSOP to Caesars Palace or Planet Hollywood.
Harrah’s had announced plans for its IPO just two weeks ago and would have entered the NASDAQ Global Select Market under the symbol “CZR” for Caesars Entertainment Corporation. A little over 31 million shares were up for grabs. Net revenues for Harrah’s in the third quarter of 2010 were flat at $2.2 billion year-over-year. The company attributed the stationary numbers to “revenues associated with our February 2010 acquisition of Planet Hollywood, which were mostly offset by the continuing impact of the recession on customers’ discretionary spending.”
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