Harrah’s owners increase cash offer to buy back debt

Harrah’s Entertainment announced Thursday that bondholders have tendered 57 percent of the notes the company was seeking in a debt exchange offer that expires in two weeks.

The $5 billion in notes that have already been tendered will receive a premium of 3 cents on the dollar above their exchange rate.

Near-term notes were valued as high as 34 cents on the dollar Thursday, while notes maturing in six years to nine years were valued between 12 cents and 8 cents on the dollar, data from the Financial Industry Regulatory Authority show.

The announcement coincided with the casino giant’s owners announcing that they had increased their current cash offer to buy back additional debt during the debt exchange.

Harrah’s is seeking to issue $2.8 billion in lower value/higher interest notes that will expere in 2018 for current notes that mature within the next nine years.

Harrah’s is currently struggling with $23.1 billion in long-term debt.

Harrah’s officials declined to comment further on the announcements because the company is in a quiet period until the exchange offer expires April 1.

Private equity firms Apollo Management and TPG Capital increased the amount of cash available to buy back a pair of notes issued in December to $350 million from the $250 million announced March 5. The owners hope to buy back as much as $946 million, up from 676 million, with the adjusted offer.

Bloomberg New reported Friday Apollo and TPG have already been buying part of the company’s $23.1 billion debt load to help ensure they remain in control of Harrah’s should it be forced into bankruptcy.

The owners have bought nearly $2 billion in loans, and may hold as much as 20 percent of Harrah’s “second-lien” loans through a proposed debt exchange, according to a copy of an offering memorandum dated March 5 obtained by Bloomberg News. The private equity firms bought Harrah’s Entertainment for $30.7 billion in January 2008.