Palms partners with buyout firms to reduce debt

Leonard Green & Partners LP and TPG Capital announced Tuesday that they will become partners in the Palms, as owner George Maloof completes a deal that will “significantly reduce” the property’s debt.

Maloof, who opened the Palms in 2001, declined to comment on whether the deal means the buyout firms would assume a controlling stake in the Las Vegas celebrity hangout.

“We have an equity stake in the Palms,” Maloof said in a phone interview late Tuesday. “We have a property that has done very well in a brutal market. I’m sure we’ve captured some market share from other people.”

The property was backed by a $400 million revolving credit agreement that was due in October and wasn’t refinanced. Maloof said the credit agreement was extended before Leonard Green and TPG “converted that into equity.”

Maloof said he is “very excited” about the deal, which will allow the company to make improvements to the hotel-casino, less than a mile west of the Strip. He said it also allows possible acquisitions.

Representatives of Leonard Green and TPG could not be reached for comment. In a joint statement, the firms said, “We are excited to partner with the Maloof family on this world-class asset and iconic brand.”

Maloof said it is now up to Station Casinos LLC to decide whether to maintain its minor ownership in the hotel.

“We’re pleased that George reached an agreement with TPG,” said Lori Nelson, spokeswoman for Station. “Our discussions are ongoing.”

The Palms has 95,000 square feet of casino space and is marketed as both a celebrity hangout and a place for local slot machine players.

The property has 1,300 hotel rooms, including several high-end suites in the Fantasy Tower. Suites themed after the Playboy Club have private outdoor pools, while others have a bowling alley and a basketball court. The Palms also has a 600-unit condominium tower.

Leonard Green, which manages about $9 billion in equity capital, unsuccessfully sought control of the M Resort in Henderson, losing out in October to Penn National Gaming Inc.

TPG owns Caesars Entertainment Corp. after taking the company private for $30.7 billion in January 2008 with Apollo Global Management LLC.

The deal is subject to approval by Nevada gaming regulators.

Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.