Harrah’s Entertainment, the world’s largest casino company, has revealed plans to swap $2.8 billion worth of bonds due over the next five years for bonds giving a higher income but due in 2018. This will not only secure income for investors going forward but will take the short-term pressure off Harrah’s Entertainment and reduce the company’s exposure to significant refinancing problems.
Taken private only 14 months ago this is the second such debt exchange which has been proposed in light of the $30.7 billion takeover. The takeover itself took over 12 months to conclude due to significant regulatory hurdles to leap, by which time the equity markets and bond markets had frozen. The company has been battling against a falling casino income over the last 12 months and is looking to refinance its balance sheet in the most efficient way possible.
While it has to be said that no casino company in the world is immune from the ongoing onslaught of the worldwide recession, if Harrah’s Entertainment was to go under this would be a significant blow for the sector. Like most of the off-line casinos the company has recently withdrawn from various expansion projects and written off literally billions of dollars of partly finished construction projects.