Harrah’s Entertainment, the world’s largest casino company, announced on Monday that it plans to sell $575 million in shares through an initial public offering. Three years ago Harrah’s went from public to private with two private equity firms, TPG Capital LP and Apollo Global Management LLC buying the stock for roughly $28 Billion in a leverages buyout.
Harrah’s, which owns or manages 52 casinos in seven countries and the World Series of Poker brand,, had $8.9 billion in revenue in 2009. The company said it lost $274 million on $2.2 billion in revenue during the second quarter this year. Most of the capital raised would go toward completion of developments the company has under way including the 660-room Octavius Tower at Caesars Palace which was halted last year, the construction of LINQ – a dining and entertainment retail area situated between the Imperial Palace and the Flamingo hotels in Las Vegas, both owned by Harrah’s, and to finance a joint venture in Ohio with Rock Gaming LLC.
So why the move for an IPO by Harrah’s? Some speculate it has something to do MGM’s recent moves to boost its capital structure.
Last week, MGM announced it will be selling at least 68.7 million shares to raise about $500 Million in new capital to help with 2011 and 2012 debt refinancing needs. MGM plans to sell at least 40.9 million shares, while Tracinda Corporation, MGM’s largest shareholder which is run by Billionaire Kirk Kerkorian, will sell another 27.8 million.
In its filing, Harrah’s says “a recent H2 Gaming Capital study anticipates that the global online gaming market will grow to $36 billion in revenues by 2012. We believe that the largest opportunity in online gaming in the near term is the legalization of the United States online poker market.” Harrah’s adds that it’s the “only U.S. land-based casino company to operate an online casino.”