Harrah’s IPO Cancelled

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2010. November 22. |
According to a company statement, WSOP rights owner Harrah’s Entertainment withdrew its initial public offering announced only two weeks ago. Bankers say the $15-$17 for the shares was “too high a price given [Harrah’s] prospects and circumstances.”
Harrah’s statement issued on Friday read “Harrah’s Entertainment, Inc. today announced that it is not pursuing its initial public offering of common stock at this time due to market conditions.” The company was taken private in 2008 by TPG Capital and Apollo Global Management but got deep in debt by 2010, not least due to the global recession. Following a report by Moody’s Investors Service, IPO seemed to be the only sound option, to which they eventually resorted.

Harrahs

Although not releasing TPG’s and Apollo’s own shares, the 31 million that were offered at an initial price of $15-$17 each could have raised around $500 million, but they were considered too expensive for the real worth and possibilities of the company: “Apollo and TPG had managed to extend the duration of the debt used in the buyout but Harrah’s remains highly leveraged and the prospect for economic recovery remains uncertain,” experts explained.

Harrah’s planned to enter the NASDAQ Global Select Market as CZR (denoting Caesars Entertainment Corporation); revenues for the company, however, remained below what was expected by prospective shareholders, which they imputed to “the continuing impact of the recession on customers’ discretionary spending.”

What could possibly help the company remains to be seen; selling some of their assets seems to oppose their current policy (see the acquisition of Planet Hollywood and the Thistledown racetrack), while restructuring existing debt would endanger bondholder interests.
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