News

Harrah's changing name to Caesars Entertainment

9 November 2010
By Howard Stutz

LAS VEGAS, Nevada -- Harrah's Entertainment is planning to raise $610.9 million in an initial public offering this month and will change its corporate name to Caesars Entertainment.

In a filing with the U.S. Securities and Exchange Commission on Friday, the casino operator said it would offer 31.3 million shares of common stock priced between $15 and $17 a share on the Nasdaq National Market under the symbol CZR.

An additional 4.7 million to underwriters will cover overallotments, the Las Vegas-based company said.

Harrah's was taken private in a $29 billion private equity buyout in January 2008. Four months later, the company announced plans to change its name to Caesars Entertainment, but never followed through on the effort.

Harrah's acquired rival Caesars Entertainment in June 2005 for $9 billion, which, at the time, was the casino industry's largest-ever buyout.

Harrah's is considered the world's largest casino operator with 53 properties in six countries. The company also owns the World Series of Poker.

In Las Vegas, Harrah's operates 10 casinos on the Strip, including Caesars Palace, Bally's, Paris Las Vegas, Planet Hollywood Resort, Harrah's and the off-Strip Rio.

The name change follows a move in June by rival MGM Resorts International, which changed its corporate name from MGM Mirage. Las Vegas Sands Corp. executives have discussed changing the company's name to either Sands International or Sands Resort International.

In a filing last month with the SEC, Harrah's said its two private equity owners, Leon Black's Apollo Management LP and David Bonderman's TPG Inc., would retain their controlling interest in the company if the company goes public again.

In addition to its own shares, Harrah's registered $710.3 million of shares for sale by hedge fund billionaire John Paulson through his New York City-based Paulson & Co. In June, Paulson acquired almost 10 percent of Harrah's by swapping bonds bought at a discount.

Harrah's said last month it was seeking to raise as much as $575 million to build two casinos planned for Cleveland and Cincinnati and for the completion of a 660-room hotel tower at Caesars Palace.

Separately last month, Harrah's became involved in an effort to save a troubled casino project in Philadelphia.

"We're focused on potential growth opportunities," Harrah's Chief Executive Officer Gary Loveman said in a statement.

In a separate announcement Friday, Harrah's said it narrowed a third-quarter loss.

The net loss for the quarter ended Sept. 30 shrank to $164.8 million, compared with a loss of $1.62 billion a year earlier.

Total revenues during the quarter were $2.29 billion, relatively flat compared with a year ago.

Harrah's said its companywide cash flow fell 10 percent during the quarter to $505.6 million.

Loveman said the company is continuing to cut costs and is targeting $129 million in savings for the fourth quarter.

"Although visitation also increased slightly in certain markets, including Las Vegas, and there are signs consumer spending may be stabilizing, we're continuing to exercise cost discipline," Loveman said.

Harrah's has cut more than $4 billion in debt in the past two years by offering creditors new bonds at a discount for their old notes, buying back other debt for less than face value and extending maturities on $5.5 billion in loans.

Harrah's still has long-term debt of more than $23 billion, one of the highest debt loads in the gaming industry.

Deutsche Bank gaming analyst Andrew Zarnett said Harrah's overall results were mixed by markets. Declines in Louisiana, Mississippi, Iowa and Missouri were mitigated by stronger results in Indiana and Illinois

Zarnett said Planet Hollywood Resort's results helped the company's Las Vegas properties increase cash flow by 14 percent in the quarter. However, if Planet Hollywood Resort is backed out, he estimated Harrah's cash flow in Las Vegas would have decreased by 10 percent.