As predicted and dreaded by skeptical bond analysts, proceeds from Harrah’s Entertainment‘s semi-IPO of 17% of the company, it has been officially disclosed, will be rolled into retail therapy for CEO Gary Loveman. An anticipated $575 million will be used to A) buy into a pair of Dan Gilbert-owned casinos in Ohio, B) finish the mothballed Octavius Tower (above) at Caesars Palace, C) revive the “Linq” mall-plus-Ferris wheel project on the Strip and D) put the remainder toward “another potential casino management and partial ownership opportunity.” I’d say there’s a 95% probability that’s a reference to the erstwhile Foxwoods project in Philadelphia, with about a 5% chance that Harrah’s is alluding to the Palms (although the private-equity funds that own Harrah’s did conduct a panty raid on George Maloof‘s debt not long ago).
Paying down part of at least $20.8 billion in debt? Not such a big priority at Harrah’s HQ, it seems. However, the Octavius completion and Linq revival will put jobs back into the Las Vegas economy and, in the latter case, spruce up one of the tattiest parts of Harrah’s stretch of the Strip. So two cheers for that. Interesting how the Octavius Tower is a “go” project now that Uncle Carl’s Carpet Barn — The Failsino Formerly Known as Fontainebleau — is looking less and less likely to be completed.
On a somewhat related note, why has it taken until now for CFO Jonathan Halkyard to receive a Nevada gaming license? He’s held his current title for over four years. There’s something very wrong with the Silver State’s licensing process if the licensing process has become that much of a laggard.
M-barrassment: Did a too-opaque bidding process cost Lloyd’s Banking Group a decent return on the M Resort loans it sold to Penn National Gaming last week? It’s starting to look that way. Meanwhile, even though Penn’s effectively taken itself out of the picture, talk of selling The Rio won’t go away. Harrah’s is between something of a rock and a hard place: It cannot, under any circumstances sell The Rio for less than $300 million and even a sub-$425 million sale would incur financial penalties imposed by mortgage-holding bankers. Unless Colony Capital can be suckered enticed into paying top dollar for The Rio, Harrah’s could be stuck with it for years to come.
Lloyd’s Banking group must have subcontracted the bid paperwork over to B of A’s mortgage processing folks:
“Potential buyers submitted bids and then resubmitted them — in some cases, multiple times — without knowing what others were offering. For some bidders, the process felt like they were fumbling in the dark, at risk of being aced out by the competition.”