Paulson Bets Big On Gaming Industry

Jun 4 2010 | 9:19am ET

Paulson & Co. is betting big on the gaming industry, agreeing to take a 9.9% stake in Las Vegas-based Harrah's Entertainment Inc.

Under terms of the deal disclosed by Harrah's on Thursday, the hedge fund firm will trade $351 million in cash for $532 million in debt owned by a subsidiary of Harrah's.

As part of the deal Paulson will exchange the $532 million in debt and an additional $178 million of Harrah's debt held by Paulson for a 9.9% equity stake. Harrah's current owners, Apollo and TPG Capital, will exchange $408 million of debt for equity under similar terms, providing much a much needed debt reduction for the highly levered casino company.

Harrah's Entertainment—world's largest provider of branded casino entertainment—became saddled with debt during the go-go years of easy borrowing for leveraged buyouts when Apollo and TPG Capital took the company private for $30.7 billion in early 2008. 

"We are raising capital for emerging domestic and international growth opportunities, and upon closing of the exchange, will reduce our debt and lower our interest expense," said Gary Loveman, chairman of the board, chief executive officer and president of Harrah's. "The investment from Paulson, an independent third party and a large, sophisticated investor, reflects the strong and resilient performance of our company, particularly as we emerge from a difficult economic climate, and the encouraging prospects for our future. We also are gratified by the confidence in Harrah's demonstrated by our sponsors, Apollo and TPG."

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…