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World Series of Poker Sponsor Harrah's Cash Flow a Problem

Written by:
Jagajeet Chiba
Published on:
Mar/19/2009
Harrah's

Earlier in the week, Gambling911.com reported on how MGM was in serious financial peril.  Now comes word that World Series of Poker sponsor, Harrah's, may not be able to fund its debt. 

In an SEC filing, the company says sluggish business at its casinos may force the sale of some assets or result in restructuring.

Harrah's, which was bought in January 2008 by affiliates of Apollo Global Management LLC and TPG Capital LP, has $24.5 billion face value of outstanding debt, according to the filing. 

The sagging U.S. economy has drastically reduced visits to the company's casinos.

MGM is in the same boat it seems.

Despite winning a two month reprieve to restructure debts, auditors raised 'substantial doubt' in whether MGM Mirage could continue operations. MGM Mirage, largest casino owner on the strip, has reported a painful $1.15 billion fourth-quarter loss after writing down properties because of shrinking gambling revenue.

The auditor's comments increase the likelihood MGM Mirage will seek bankruptcy protection from creditors. Banks granted waivers on the $7 billion bank-loan facility until May 15. The company said on March 3 it was in talks to avert a potential breach of covenants.

And on Tuesday, Station Casinos, which runs a handful of Vegas Strip hotels, announced its intentions to file for bankruptcy protection by mid-April

Station had its attorneys file court papers Monday opposing a motion for a court injunction sought by a bondholder who is seeking to block the debt-exchange, a key part of Station's plan to file a pre-packaged bankruptcy petition that would keep its business operating and includes a cash infusion of $244 million by Station owners the Fertitta family and Colony Capital.

Boyd Gaming Corp., in the meantime, has been taking its case to buy all or part of Station directly to bondholders after it was rebuffed by Station.

Frank Fertitta III is CEO of Station Casinos as well as co-founder of the Ultimate Fighting Championship (UFC).

Jagajeet Chiba, Gambling911.com         

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