Harrah
The biggest bet on the Las Vegas Strip has not paid off yet.
Private equity firms Apollo Global Management and TPG Capital LP TPG.UL bought Harrah’s Entertainment, which operates nearly 40 casinos across the United States, for $31 billion in January.
It was the peak of a leveraged buyout bubble that moved companies like Hilton Hotels and Station Casinos into the hands of private investors.
Now Harrah’s has put most of its development plans on hold as it grapples with a soft economy and a heavy debt load.
“They are doing everything they can to avoid a debt restructuring. The equity investors would be wiped out,” said Kim Noland, director of high yield research at Gimme Credit.
“They are basically breaking even on a cash flow basis.”
Spending is mostly focused on a new hotel tower at Caesars, which is slated to open next year, and $400 million a year for maintenance cheap payday loans. It is using the rest of its cash for interest payments, Noland said.
“Four hundred million dollars is a lot — with so many properties it wouldn’t be completely out of the question that they might cut back on maintenance,” she said.
Filed under: business by Finance Boss