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Harrah's reduces debt load by $2.3 billion

Harrah's Entertainment reduced its debt load by $2.3 billion in a debt swap program that ended Tuesday, although industry analysts Thursday couldn't determine whether that will be enough to keep the company out of bankruptcy court.

The gaming giant, which reported a $23.1 billion debt load on Dec. 31, said 64 percent, or $5.6 billion, of the bonds offered in the exchange were tendered by the late Tuesday deadline, a filing with the Securities and Exchange Commission shows.


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  • Bond analysts Thursday said they are examining the exchange details and will begin releasing reports Friday discussing the impact of the company's debt swap on the company's bank covenants and liquidity.

    The exchange, which is scheduled to be settled by Wednesday, will mean $3.4 billion in new 10 percent notes that will mature in 2018 will be issued.

    A subsidiary of the company issued an additional $297 million in new notes for $442 million in bridge loans the company repurchased.

    Most debt holders who redeemed old notes for new notes or cash, however, held notes that matured in 2015 and beyond. The new debt has a longer maturity date than the debt tenders, and higher interest rates in most cases.

    Only $245.8 million in notes maturing through 2013 were redeemed. Harrah's still has $514 million in notes maturing in 2010, and $964.2 million in notes maturing through 2013.

    That is the same year a $6.5 billion commercial mortgage-backed securities loan matures. That loan is leveraged against the Rio, Paris Las Vegas, Harrah's and Flamingo in Las Vegas, as well as one property in Laughlin and one in Atlantic City.

    This is the company's second exchange offer in the past five months. The earlier debt swap resulted in $2.2 billion in debt being exchanged for $1.1 billion in new notes and cash.

    The company's bottom line has been hit hard because of its huge debt load, which largely resulted from the $30.7 billion buyout of Harrah's by Apollo Management and TPG Capital in January 2008.

    Harrah's Entertainment officials said in mid-March that the company might not generate enough cash flow or secure additional loans to service its debt.

    The world's largest casino company by revenue reported March 17 that revenues last year dropped 10.3 percent to $10.13 billion from 2007. That drove down cash flow 16 percent, from $2.81 billion in 2007 to $2.36 billion last year.

    The company paid $2.1 billion in debt expenses in 2008, largely tied to interest expenses on the debt load.

     

    Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.

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    "Hurrah" is in denial... wrote on April 10, 2009 11:37 AM: "Hurrah," you are one of the few that still thinks Harrah's is such the employer of choice. How has your wife enjoyed having her 401(k) match eliminated? Has she enjoyed the reduction in hours? How about the wage freezes? Perhaps if you had better grammar and didn't resort to using exceptionally divisive words like 'retard,' you would be marginally more credible.


    tammi wrote on April 09, 2009 09:00 PM: as an IP employee, I cann say since Harrahs took over things have gone to the crapper. Ralp was awesome to work for.


    danny wrote on April 09, 2009 08:01 PM: Yep, We get comps sent to us monthly. We will stay at Harrah's no matter who runs it. Yep, no matter who you want too blame, all top management recieve hughe money trophies and this will keep on going on until we all single out all companies who still reward failure. Vote for the person, not the D or R in front of there name. Vote for a beginner not a politician.


    glenver wrote on April 09, 2009 07:35 PM: I have been coming to Vegas 2-4 times a year for well over 10 years on my vacations. I don't need anything fancy and learned real quick the IP was a great place to stay with reasonable price. Ever since Harrah's bought the IP after the passing of Mr. Engelstad, it seems to be getting worse and worse at the IP every year. Birthday comps and cheap rates for long time customers disappeared as soon as Harrah's took control. The stories I hear about former long time employees no longer working there due to Harrahs management decisions makes me ill. The good people that have been there many years are not happy. Seems that Harrahs thinks they can service more people with less employees and people won't notice because they are tourists. Well guess what Gary, we do notice. I prefer to play video poker at a bar. Half of your bars at the IP are now closed, you pack everybody from 3 or 4 bars into 1 and you need to wait to get a seat at 2 AM. Not good. And all those waitresses that also have to be serviced at the same time that could be serviced at other bars.... not good. It's no longer a relaxing place to stay. Ralph is probably rolling in his grave seeing what you have done. And Gary, read this, I just visited Laughlin for the first time and was rather impressed. It was not Harrah's I was at, it was a privately held casino. Run the way Ralph used to run the IP from what I could tell. Too bad you don't have any money to buy that place and run that in the ground too. Harrah's bankruptcy can not come too soon. Maybe things can get better after that.


    ron wrote on April 09, 2009 07:31 PM: to bad but gary l could care less. he got his 39 million, screw the company, screw the employees, he will probably get a job at AIG next!


    tard wrote on April 09, 2009 06:47 PM: "tax payers can reduce their debt load if they get rid of paramedics" - you are an idiot. Peddle your crazy somewhere else.


    Oscar wrote on April 09, 2009 12:11 PM: Harrahs is a glittering grind joint, that, like all casino's , has no regard for it's employees. Their goal, is to take your money. Then once they have it, they want you to get your sorry butt out of their property ASAP, to make room for the next sucker.


    Hurrah for harrahs wrote on April 09, 2009 11:21 AM: My wife has worked for Harrahs for over 10 years now, they have treaded us like gold. Try working hard and doing your job without complaining and or bringing your horrible home lives to work with you (especially all the debt ridden over financed negative equity miserable people)! Anyone that gets laid off from a casino has chosen the wrong department (many are more fickle than celebrates picking mates) and/ or is a slacker. If you get let go right before your review and do NOT see it coming you are blind and or retarded! Name ONE other location on earth that has over 60 of the exact same business on the same street, of course the gaming industry will be non recession proof! Finally people that move away from their problems and think that Vegas will save them and their families are high! This is no town for kids and or families, with a few very few exceptions of good parents with strong family morals! Finally any boom town will bust in one way or another. In 1976 there were less than 1 million people in the entire GIGANTIC state of Nevada. Now Vegas approaches 2 million itself, like evolution promises, the strong live on the weak get sold and laid off. Harrahs is the BEST run casino in the world OBVIOUSLY, (largest operator with over 40 properties world wide) and a last point to remember. They don't steal peoples money like WALL STREET and every single retirement type fund, people voluntary come though the (ALWAYS OPEN DOORS) and willingly give their money away. Only business in the world that actually gets paid for doing and giving nothing. Bunch of spoiled lazy losers!


    DMCinLV wrote on April 09, 2009 11:20 AM: "For the sake of the employees, I hope Harrah's sells off some assets - preferably the former Caesars Entertainment properties - so that another company / companies can do some good."

    Mike from GV, here's hoping so. Then maybe those of us who came from there can go back to work for the best!


    Mike from GV wrote on April 09, 2009 11:10 AM: I agree with what's been said. I care about those who work for Harrah's but, unfortunately, the company cares nothing about its employees. And it is definitely a mismanaged company. Back in '07 I took a 10K paycut with another company so I could get out of Harrah's - and I was glad to do so.

    For the sake of the employees, I hope Harrah's sells off some assets - preferably the former Caesars Entertainment properties - so that another company / companies can do some good.


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