Harrah's lowers debt by 2.3B.
April 13, 2009
Through a debt-exchange offer that the company said expired last
week, Harrah’s Entertainment reduced its debt by some US$2.3 billion, but speculation
remains whether the debt-reduction plan of the world’s largest gaming company
will be enough to fend off bankruptcy.
Harrah’s said it accepted exchange
notes with a principal amount of $5.55 billion, which it will exchange for $3.4
billion in new 10 percent notes due 2018 and about $102 million in cash. The
new debt has a longer maturity and, in some cases, a higher interest rate. The
company also replaced $442 million in bridge loans with the new 2018 notes
valued at $297 million.
In a press statement on its Web site, the
company detailed the debt-exchange plan to date including that it paid $1.7
billion in interest and other debt expenses last year.
While a positive development, several media outlets have interviewed financial analysts regarding Harrah’s prospects moving forward. The Las Vegas Sun quoted one expert as saying “(Harrah’s) should now clearly get through 2010 without any liquidity problems.” Citing bond analysts, the Las Vegas Gaming Wire reports that further examination of the exchange details will reveal the effectiveness of the debt-swap program.
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