Harrah’s deal goes before board

The Gaming Control Board is scheduled to hear testimony on the $17.1 billion deal to take Harrah’s Entertainment private in a $90 per share buyout by Hamlet Holdings, a joint venture between private equity firms Texas Pacific Group and Apollo Management.

Another topic that may — or may not — be broached during the hearings is the ongoing investigations into remodeling projects at two local Harrah’s Entertainment hotel-casinos.

Gaming Control Board Chairman Dennis Neilander said he couldn’t say what would be discussed at today’s meeting. However, Gaming Control Board member Randall Sayre said in October that the room renovation problems that forced Harrah’s to shut hundreds of rooms at the Rio and Harrah’s resorts are a separate issue from the buyout and should have no major effect on deciding the deal’s suitability.

The three-member board is expected to hear testimony about how the deal will be financed and how the company and its board will be structured after the buyout.

The Harrah’s deal, which will total $27.8 billion including assumed debt, will be the biggest private takeover in the gaming industry.

But it is not the first. Just two months ago, Station Casinos executives were standing before state regulators seeking approval of their own $5.4 billion buyout deal.

However, Station Casinos was a management-led buyout that left the founding family with a 25 percent stake in the company, control of the day-to-day operations and a majority on the board of directors.

Harrah’s Entertainment’s current management team, including board Chairman and Chief Executive Officer Gary Loveman, will operate the company day-to-day, according to testimony at the New Jersey Casino Control Commission’s hearings on the deal.

The remaining board members will be split between Texas Pacific Group and Apollo Management with each equity firm having four seats.

Unlike Los Angeles-based real estate firm Colony Capital, which owns the remaining 75 percent of Station Casinos and which was already licensed in Nevada, Texas Pacific and Apollo has not appeared before Nevada regulators before.

A group of activists from west Las Vegas has asked to testify at the hearing about the company’s record with minority hiring and investment in minority neighorhoods.

National Action Network, a civil rights organization headed by the Rev. Al Sharpton, wants regulators to look at the gaming company’s track record on minority hiring, the awarding of construction contracts and its lack of investment in west Las Vegas.

Gene Collins, president of the Nevada chapter of the National Action Network, said Tuesday that the citizens of west Las Vegas have been unable to meet with the ownership group buying Harrah’s despite numerous requests.

"How in the world could you come into a community and not do anything for the community you intend to come into?" he said.

The buyout, first announced Dec. 19, 2006, was approved by shareholders in April. It has gained approval from gaming regulators in Missouri, Illinois, Indiana, Mississippi and New Jersey. The deal is expected to close in late December or January.

Harrah’s owns or manages 50 casinos in the United States including Rio, Paris Las Vegas, Bally’s, Bill’s, Flamingo, Imperial Palace, Harrah’s and Caesars Palace in Las Vegas. The company also owns casinos in Uruguay, the United Kingdom, Egypt and South Africa and a golf course in Macau.

Representatives of Harrah’s Entertainment, Texas Pacific Group and Apollo Management declined comment on the pending hearings.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or (702) 477-3893.