Harrahs merger moving ahead

19.02.2007, Lesen Sie hier den Bericht über «Harrahs merger moving ahead»

Las Vegas Gaming Wire LAS VEGAS, Nevada – Attorneys working on the acquisition of Harrah's Entertainment by two private equity firms are expected to file applications for approval of the merger with state gaming regulators today. Frank Schreck, an attorney working on the transaction, said his team has already been talking to regulators in the various jurisdictions to find out exactly what regulatory concerns they may have and what documents may be requested.

"We've already, at great effort and expense, organized all the back-up documentation," Schreck said. "In trying to expedite this process we're already prepared for an investigation right after we file the applications." Schreck said that although applications are being filed now, he doesn't expect to appear before the Nevada Gaming Control Board and the Nevada Gaming Commission before October or November at the earliest.

On Dec. 19, the board of Harrah's recommended that shareholders approve a $17.1 billion offer from Apollo Management and Texas Pacific Group. If approved, it would be the largest private equity buyout of a gaming company. Although a private equity merger of this size is new to the gaming industry, Schreck helped develop the model for private equity-gaming transactions when Colony Capital of Los Angeles purchased the Lake Tahoe-based Harveys Casino Resorts for $420 million in 1999.

"There appears to be a public perception that private equity is new," Gaming Control Board member Mark Clayton said Thursday. "That's not the case. We've dealt with it in the Harveys transaction and a few other transactions that have been before the board. There are three other (private equity) transactions pending for our review." He added that because the application is pending he could neither discuss the Harrah's deal's particulars nor say whether the private equity merger's size would raise different concerns during the investigation. Thirteen pages of a 140-page filing submitted last week with the Securities and Exchange Commission document regulatory processes the acquisition will have to go through before approval. Schreck said that although the private equity-gaming model has already been used in Nevada, New Jersey, Indiana, Mississippi, Iowa and Pennsylvania, it will be new for gaming officials elsewhere. "From the regulatory standpoint, I can make the argument that it's better for regulators than the structure they currently have with public companies," Schreck said.

Schreck, who is chairman of the Gaming Law Group at Brownstein Hyatt Farber Schreck, pointed out that with publicly held companies, investors who own more than 5 percent of a casino company's stock holdings have to be approved by state gaming regulators. With private equity, only the fund managers need to be licensed. In the Harrah's deal, Schreck suggested 11 people combined from both Apollo and Texas Pacific would be licensed. Schreck said it's easier to follow the money in private equity deals because they tend to be backed by teacher's retirement funds, state pension funds and other group funds that invest for the long haul. Although public shareholders may invest mostly to make quick money, private equity is more interested in an investment's value.

"They don't care what happens quarter-to-quarter," Schreck said. "They don't care, necessarily, what happens year-to-year. Their investment is appreciating the value of that asset and eventually they'll realize that through another IPO or by selling it to some strategic buyer eight, 10, 12 years down the road." Harrah's owns and operates 12 properties and is scheduled to acquire the Barbary Coast in a land swap with Boyd Gaming Corp. Harrah's will rename the property Bill's Gamblin Hall in honor of the company's founder, Bill Harrah.

The buyout deal will require regulatory approval from officials in New Jersey, Iowa, Illinois, Indiana, Louisiana, Mississippi, Missouri, and Pennsylvania as well as Ontario, Canada; England; and South Africa. Although Harrah's has interests in properties in California, Arizona, North Carolina, Kansas, Egypt and Uruguay, it is unclear whether regulatory approval of the merger will be required in those locales. Harrah's said in January that it may give up a contract to operate an Indian casino in Kansas to clear itself of strategic interests ahead of the regulatory process.

The filing doesn't address interests in Kentucky, Delaware, Alabama and Australia. The merger is also subject to review by Federal Trade Commission and the Antitrust Division of the Department of Justice. Harrah's has until Feb. 28 to file a notification of the merger with the federal agencies.

Founded in 1937, Harrah´s Entertainment, Inc. is the world´s largest casino operator.

We operate 28 casinos in 12 states under the Harrah´s, Harveys, Horseshoe, Rio, and Showboat brand names. Our goal is to provide great customer service in exciting and entertaining environments, and become your overwhelming first choice for casino entertainment.

We concentrate on building loyalty and value for our customers, shareholders, employees, business partners, and communities by being the most service- oriented, technology-driven, geographically-diversified company in gaming. Enjoy your visit to our site. We look forward to your comments about us.

		
 
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