In an effort to resign some of their current debt and retire loans that the company has, it was announced Tuesday evening that Harrah’s Entertainment, the owner of the World Series of Poker, has proposed to sell as much as $1 billion in senior secured notes to qualified institutional buyers.
Two subsidiaries of Harrah’s – Harrah’s Operating Escrow LLC and Harrah’s Escrow Corporation – are proposing to issue $1 billion aggregate principal amount of senior secured notes that will come due in 2017. The notes are part of a private offering that is exempt from the registration requirements of the Securities Act of 1933. Harrah’s intends to use the net proceeds from this private offering to retire a portion of Harrah’s existing term loan and revolving credit indebtedness and for general corporate purposes.
The proposed sale of the secured notes will be offered only to qualified institutional buyers and outside of the United States, in accordance with several regulations under the Securities Act. This means that U. S. institutions will not be able to purchase any of the proposed notes.
The latest proposal comes on the heels of Harrah’s previous actions from late 2008. In December, Harrah’s decided to relieve some of their immediate debt through the refinancing of bonds that were due within the next couple of years. After being proposed on November 14th, Harrah’s moved forward with these plans and privately exchanged their existing short term debt for debt with a later exchange time and rate.
On December 1st, approximately $4 billion of the private company’s debt – representing 36% of that total – had been exchanged by holders of outstanding notes. On April 15th of this year, the exchange offers and tender offers described above were closed and about $5.4 billion aggregate principal amount of old notes and interim bridge loans were exchanged for approximately $3.6 billion face value of new notes, reducing the company‘s debt by $1.8 billion.
On April 28th, Harrah’s announced the financial results of their first quarter 2009. For the time period that ended March 31st, Harrah’s first quarter 2009 income from operations was $285.4 million, compared with income from operations of $401.0 million in the 2008 first quarter. After taxes and payment of operating expenses, Harrah’s reported a 13.3% decline in overall earnings.
Just last week, Harrah’s announced the implementation of Harrah’s Interactive Entertainment. Headed by former PartyGaming CEO Mitch Gerber, the new organization is taking charge of expanding the World Series of Poker brand through development of gaming in non-U.S. countries and focusing on other Harrah’s brands. World Series of Poker Commissioner Jeffrey Pollack will add on to his responsibilities as he takes on the role of President of Harrah’s Interactive Entertainment. It is believed by many that Harrah’s is possibly getting their feet firmly established in the online world to be ready if and when the Unlawful Internet Gaming Enforcement Act is overturned, as Massachusetts Representative Barney Frank is attempting with several pieces of legislation.
