Wednesday, Feb. 3, 2010 | 1 p.m.
- Harrah’s to take over Planet Hollywood management (1-15-10)
- Harrah’s moves ahead with possible Planet Hollywood acquisition (11-30-09)
- Harrah’s working on plan to take over Planet Hollywood (11-25-09)
- Planet Hollywood’s financial outlook worsens (11-16-09)
- Harrah’s buys Planet Hollywood debt (9-15-09)
Harrah's received preliminary state approval to acquire Planet Hollywood today, with company executives telling gaming regulators they plan to cut the property's workforce by less than 5 percent.
The Gaming Control Board recommend approval of the deal, which calls for Harrah's to acquire $306 million in debt at a discounted price of under $70 million and to assume the remaining $554 million debt to gain ownership of the hotel-casino.
Board Chairman Dennis Neilander noted there are 40 gaming companies in Nevada in bankruptcy and Planet Hollywood might have been headed for a restructuring or "perhaps bankruptcy" until Harrah's stepped in. The acquisition "makes a lot of sense for Harrah's and it's a benefit for the state," he said.
Marilyn Winn, who is president of Harrah's Bally's and Paris properties, will also assume the leadership at Planet Hollywood. She and Tom Jenkin, president of Harrah's western division, outlined plans to revive the fortunes of the newest casino in the company's empire that includes more than 50 casinos across four continents.
Jenkin said Harrah's will assume the company will take over operation of restaurants, entertainment and nightclub at Planet Hollywood. He said the present entertainment group has not been able to provide quality entertainment. "We can do that."
The Miss America Pageant was staged in January at Planet Hollywood and the Miss USA contest will be held in May. Harrah's also will promote movie premiers at the hotel casino.
Winn said there are currently 2,300 employees at Planet Hollywood and the company plans to cut less than 5 percent of the workforce. Harrah's will assume the collective bargaining contracts in effect.
Jonathan Halkyard, Harrah's chief financial officer and treasurer, told the Control Board that the company "continues to see a softness in gaming" and it "does not see a real strong recovery now."
But company officials said they believes they can prop up Planet Hollywood with management and efficiencies to show a slight growth in the near future.
The Nevada Gaming Commission will meet Feb. 18 to give final approval and, if approved, Jenkin said Harrah's will assume full control at noon on the following day.
Harrah's plans to pump in $30 million as working capital for the Planet Hollywood. To rejuvenate Planet Hollywood, Jenkins said it would tap its customer base and draw new players. It will use direct mail, group sales and try to attract leisure visitors.
Of the $554 million outstanding of the debt, the loan will mature in December 2011 and there are options to push the maturity to April 2015. Halkyard said the company will pay $20 million in interest on the debt a year.
According to documents supplied the board, Harrah's had a net debt of $20.8 billion as of last Sept. 30. By making financial transactions, Halkyard said it was able to reduce its debt by $4.2 billion and its annual interest payments by $150 million.