Harrah’s might have tough luck
TEXT OF STORY
Doug Krizner: Next week, Harrah’s Entertainment will spin the roulette wheel. The world’s largest casino brand needs a $9 billion loan. It’ll be the first company in 2008 to bet the frozen credit markets are beginning to thaw. Jill Barshay reports.
Jill Barshay: Two private-equity firms are trying to complete their $18 billion buyout of Harrah’s.
Chris Donnelly is a vice president at Standard & Poor’s LCD. He says Harrah’s needs to borrow heavily.
Chris Donnelly: Everyone’s watching this deal, because it’s one of the largest transactions that’s going to come to market this year.
Donnelly says casinos are cash cows. Usually investors line up to buy their debt. But now, the credit markets are so sick that the usual buyers aren’t even coming to the table.
Donnelly says Harrah’s will have to offer high interest payments and fat fees to get the deal done.
Donnelly: If this can’t get done, then everyone’s really going to be worried.
Donnelly says if investors don’t buy this casino debt, it will be hard for anyone to acquire any company through a leveraged buy out this year.
In New York, I’m Jill Barshay for Marketplace.
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