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Harrah’s Entertainment Inc. has confirmed a deal with Paulson & Co to infuse a hefty sum of cash into the debt ridden casino operator.
The company disclosed this week, that Paulson & Co has agreed to take a 9.9% equity stake and provide $351 million for $532 million debt owned by a Harrah’s subsidiary.
Apollo Management LP and TPG Capital LP, Harrah’s owners, will also put in $200 million to buy $303 million of Harrah’s subsidiary’s debt.
The debt will then be exchanged, together for 15.6% equity in the company.
The purpose of the transaction is to reduce debt from $21 billion to approximately $900million and free up cash to make future investments.
“What this allows us is really additional capital for development projects that we would like to pursue,” CFO Jonathan Halkyard said. “We have been hindered in doing those. This gives us some additional flexibility.”
Parts of the deal are pending approval from Las Vegas casino regulators.
Paulson & Co has also recently purchased stakes in MGM Mirage and Boyd Gaming.
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