Harrah’s Entertainment attempting to acquire Planet Hollywood Resort
November 25, 2009 - 12:14 pm
Harrah’s Entertainment Chairman and Chief Executive Officer Gary Loveman told employees Wednesday the company is trying to buy the Planet Hollywood Resort.
Harrah’s Entertainment has been quietly negotiating with holders of Planet Hollywood’s debt in a bid to acquire the property through a debt purchase, multiple people familiar with the situation said this week.
“As a result of our purchase of their debt, we are working on a plan that also would allow Harrah’s to own and manage the property,” Loveman’s said in an email to employees.
The Review-Journal first reported in September that Harrah’s was buying some of the property’s $860 million debt, which is currently in default.
At that time, Harrah’s controlled nearly $140 million of the property’s debt.
Loveman’s memo said the company’s interest is due to the fact the resort sits on the southern most end of a line of Harrah’s owned casinos on the east side of Las Vegas Boulevard. The properties it already owns are Harrah’s Las Vegas, Imperial Palace, Flamingo, Bill’s, Bally’s and Paris Las Vegas.
“This is an attractive proposition because of Planet Hollywood’s proximity to our other resorts on the Strip, its high-quality product offering and its strong brand name,” Loveman said. “This move is the latest example of our strategy to make purchases or acquisitions capitalizing on opportunities created by current economic conditions.”
The acquisition of the 35-acre Planet Hollywood would give Harrah’s control of all 126 acres between Flamingo Road and Harmon Avenue.
It would also add 2,496 hotel rooms to Harrah’s inventory of 20,370 rooms on or near the Strip.
That would still be 35 percent fewer rooms than MGM Mirage’s 35,168 rooms at nine Strip hotels. MGM Mirage will be adding another 5,943 rooms when it begins opening its CityCenter project next week.
Planet Hollywood officials did not return a request for comment.
Planet Hollywood Resort is owned by a partnership between restaurateur Robert Earl and private equity firm Bay Harbour Management. Starwood Hotels & Resorts Worldwide holds a minority share in the property and manages the hotel’s food and beverage operations.
Earl and Bay Harbour acquired the old Aladdin out of bankruptcy from Aladdin Gaming on Sept. 1, 2004, for $510 million. The property’s long-term debt load swelled to $820 million in 2006 when the partnership borrowed money to remodel the property.
The property has been struggling with declining revenues because of the recession.
Contact reporter Arnold M. Knightly at firstname.lastname@example.org or 702-477-3893.