Harrah's To Sell $1 Billion In Debt
Harrah's Entertainment, owners of The World Series of Poker, has issued a statement stating that it intends to sell $1 billion of it's debt through a private offering to help retire existing loans and company expenses.
In the same week Harrah's announces its plans for a subsidiary to control its World Series of Poker arm it has also announced cost cutting plans in regard to its quite substantial debts.
Debts to the tune of $1 billion will be sold through private offerings.The offering will be made through subsidiaries Harrah's Operating Escrow LLC and Harrah's Escrow Corp.
Because of uncertainties about its financial performance, Harrah's debt has been trading at a discount. The firm has taken advantage of this by swapping old debt for new debt and cash, thereby reducing its debt burden and annual interest expenses overall.
$1 billion is a substantial amount to sell off but only covers a fraction of Harrah's total debt. In an earlier SEC filing, the company said that it had $24.2 billion in long-term debt as of March 31 2009. That amount included nearly $7.2 billion in term loans, with $1.8 billion in revolving credit facility. These figures make even Jamie Gold's victory look like the preverbial peanuts.
Where has this debts come from? The company took on $12.4 billion in debt in a $30.7 billion deal to be taken private last year by affiliates of Apollo Global Management LLC and TPG Capital LP.
The latest move is a continuation of the companies desire to lower its colossal interest payments. During the first quarter of 2009, Harrah's completed debt exchanges that reduced debt by $1.8 billion and annual interest expenses by $73.
This has been folloowed up by a decrease in quartely losses. Harrah's lost $127.4 million in the first quarter of 2009, compared to a net loss of $187.8 million in the first quarter of 2008.
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