International edition
September 18, 2020

Paulson agreed to exchange us$ 710 million in Harrah’s bonds for the equity stake

Harrah’s gets investment from Paulson, Apollo and TPG

(US).- John Paulson’s Paulson & Co. hedge fund agreed to acquire a 9.9 % equity stake in Harrah’s Entertainment, the world’s biggest casino company, raising its bet the US gaming industry will recover from a record slump.

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aulson agreed to exchange us$ 710 million in Harrah’s bonds for the equity stake, the Las Vegas-based company said today in a statement. Apollo Management and TPG Capital, which acquired Harrah’s in a January 2008 buyout, will trade in $408 million of notes for equity representing 5.6 percent of the company.

Paulson, the billionaire investor who made us$ 15 billion betting on the decline in subprime mortgages, disclosed investments in MGM Mirage and Boyd Gaming Corp. in the past month. Today’s transactions will help lower Harrah’s long-term debt, which stood at us$ 19.3 billion as of March 31. Apollo and TPG took Harrah’s private in a deal worth us$ 30.7 billion, just as Las Vegas entered a two-year decline in gambling and travel.

About us$ 835 million of the notes traded in by the three investors were acquired from Harrah’s, which received us$ 557 million in cash. Harrah’s had previously bought back the debt at a discount after bond values declined amid the debt crisis and casino-industry struggles in the recession.

Paulson, Leon Black’s Apollo Management and David Bonderman’s TPG Inc. acquired some of Harrah’s bonds in the secondary market.

After the transactions close, Harrah’s will have about us$ 1.5 billion in cash and another us$ 1.5 billion available under its revolving loan “for emerging domestic and international growth opportunities,” Loveman said in today’s statement.

Harrah’s Chief Executive Officer Gary Loveman averted a potential default last year by cutting us$ 4.2 billion of debt, offering creditors new bonds at a discount and buying back other notes for less than face value. He extended maturities on us$ 5.5 billion in loans this year.

Paulson’s New York-based fund said in May that it acquired 40 million shares of MGM Mirage, making it the second-biggest investor after founder Kirk Kerkorian; and 4 million of Boyd Gaming, becoming the fourth-largest owner, according to Bloomberg data. Both companies are based in Las Vegas.

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