Harrah’s seeks approval to trade fund’s shares

Privately held Harrah's Entertainment has asked federal regulators for permission to publicly trade shares of the casino operator that are controlled by billionaire John Paulson's New York-based hedge fund.

In a lengthy prospectus filed with the Securities and Exchange Commission, the casino operator said Paulson's hedge fund plans to sell its 9.9 percent stake as soon as possible.

Paulson acquired an interest in Harrah's for $710 million in debt in June.

Harrah's spokeswoman Jacqueline Peterson said in an e-mail that the company was in a quiet period and could not discuss the matter in detail. She denied reports that Harrah's was planning to go public some two years after the company was taken private by two private equity firms in a deal valued at $29 billion.

"We are registering equity for an investor on a shelf registration statement," Peterson said. "Documents filed today are not a primary offering by the company."

Apollo Management and TPG Capital will retain their combined 89.3 percent stake in Harrah's, which operates 52 casinos in seven countries. Harrah's has nine casinos along the Strip, including the Rio.

The papers filed aren't a primary offering by Harrah's, and the company warned it has not yet applied to list the stock and isn't required to do so under the deal made with Paulson for the stake.

Harrah's said in the filing that it will try to list the shares, but it can't guarantee there will be demand for them.

The company operates the Harrah's, Caesars and Horseshoe casino brands, the World Series of Poker and an online gaming business in the United Kingdom.

Even if Paulson's shares are listed on the open market, Harrah's said in the SEC S-1 filing it will continue to operate as a "controlled company."

Paulson made a splash in May when his hedge fund, valued at $35 billion, spent $480 million to acquire a 9 percent stake in MGM Resorts International, becoming the company's second-largest investor, and $40 million to buy 4.6 percent of Boyd Gaming Corp. The Harrah's deal came a month later.

Paulson did not comment on the acquisitions. On a conference call with analysts and investors in May, Paulson said he was bullish on the recovery of the U.S. economy.

MGM Resorts Chairman and CEO Jim Murren, in an interview in June, said he had spoken with Paulson about the investment in the casino operator. Murren said he and Paulson were acquaintances from their days as analysts on Wall Street.

"There is nothing mysterious about his objective," Murren said. "He wants to make money and he is betting on companies that would benefit from an economic recovery."

Harrah's had about $19.3 billion in debt at the end of March and the company has taken measures to lower its debt load and interest expenses.

Last week, Harrah's said it lost $274 million in the second quarter, blaming weak customer spending for the poor performance.

The company's loss reversed a year-ago profit of $2.29 billion, which included a $4.3 billion pretax gain from debt extinguishment.

Harrah's revenues for the three months ended June 30 were $2.22 billion, a decline of 2.2 percent from $2.27 billion in the same quarter a year ago.

The company posted a $300,000 loss from operations, compared with prior-year earnings of $6.3 million.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. The Associated Press contributed to this report.