Harrah's seeks to restructure debt
Harrah’s Entertainment wants to sell up to $750 million of new term loans under its current credit facility, in an effort to reduce its multibillion-debt and improve its ability to expand the company.
Harrah’s said Tuesday it would use the proceeds to refinance or retire some of its existing debt.
According the company, $175 million of the proceeds will be used to purchase some of the company’s debt maturing in the next two years. The rest will be used for further debt reduction and general corporate spending.
One analyst Barbara Cappaert called the move an attempt by Harrah’s to improve its cash position, but it would still leave the company deeply leveraged, the Las Vegas Review-Journal reported.
Cappaert, a bond analyst with KDP Investment Advisors, did note that the plan will help Harrah’s expand.“The additional liquidity definitely would help bolster spending on new projects, a strategy so clearly prioritized last week with the news that Harrah's was buying Thistledown and Planet Hollywood’s distressed debt,” she said.
Harrah’s last week announced an $89 million agreement to buy the Thistledown horse-racetrack near Cleveland. The acquisition is in anticipation of the legalization of video lottery terminals for certain racetracks in Ohio.
The Las Vegas Review-Journal reported last week that Harrah's has purchased 16 percent of Planet Hollywood Resort’s $860 million debt in a possible bid to acquire the Strip hotel-casino.
Harrah’s has nearly $501.8 million in debt maturing next year and $168.9 million due in 2011, an August filing with the Securities and Exchange Commission showed. The company has $6.3 billion in term loans maturing by 2015 and a $1.1 billion credit facility that matures a year earlier, SEC filings show.
Earlier this month, Harrah’s announced it would issue $720 million in new senior notes due in 2017 to buy down a portion of its existing term loan and revolving credit facility. The new eight-year notes will yield 11.25 percent.