Hedge Fund Harrah's
Paulson Fund Takes Stake in Harrah's Entertainment
As part of the deal, the hedge fund run by John Paulson will provide a cash infusion of $351 million for $532 million debt owned by a Harrah's subsidiary. Harrah's owners Apollo Management LP and TPG Capital LP will put in about $200 million into the company to buy $303 million debt from the Harrah's subsidiary. The companies together will exchange that debt for 15.6% equity in the company.
The debt-laden Harrah's says the total cash infusion of around $550 million should free the company up to attack its balance sheet and to make investments internationally as well as in the U.S., as many states across the country are considering proposals to expand gambling. The transaction should also reduce the company's $21 billion debt load by around $900 million, chief financial officer Jonathan Halkyard said in an interview. Much of the debt was originally taken on to fund TPG and Apollo's acquisition of Harrah's in 2008.Source