Harrah’s board reviews buy-
out proposals on Wednesday

Dec 12, 2006 5:28 AM

After about 10 weeks of "study," the directors of Harrah’s Entertainment Inc. (HET) will meet on Wednesday, Dec. 13 to consider the first, and possibly other, proposals to acquire the company.

According to information published first on Sunday by the Wall Street Journal, and copied on Monday by other news sources, the directors set a deadline of Tuesday for all potential bidders to submit their proposals.

Leading the pack is the original bid from the partnership of the private equity groups Apollo Management and Texas Pacific who in early October proposed taking the company private for $81 per share. Subsequently, it was reported that they had increased their bid to $15.5 billion or $83.50 per share.

It also has been reported that both Penn National Gaming Inc. (PENN) and the hedge fund D.E. Shaw had expressed interest in acquiring Harrah’s, the world largest gaming company with operations in 30 states and several foreign countries.

Among other considerations, according to news sources, is the possibility that the company will address the situation with a plan to recapitalize the company with a leveraged buyout of its own.

Some analysts have suggested that Penn National, a much smaller company that competes with Harrah’s in some jurisdictions, might be interested in acquiring some of Harrah’s casinos if a greater buyout plan is found to be unacceptable.

Mergers and acquisitions have kept Wall Street investors hopping of late. Just last week, management of Station Casinos Inc. (STN) proposed taking the company private in a $4.7 billion buyout plan. The company was joined by Colony Capital in its proposal to acquire all the outstanding shares at $82 per share.

Expensive loss

The effort by Harrah’s Entertainment to change the Rhode Island constitution in order to build a casino with its partner, the Narragansett Indian Tribe, in West Warwick, was a costly one, according to numbers reported by the Providence Journal newspaper.

Harrah’s spent $17.8 million, or about $125 for each vote it received in the losing cause, the newspaper reported, nearly doubling the previous state record for spending in a political race of $9 million.

Working against the casino company was the anti-casino group Save Our State that spent about $4 million. Most of this money, the newspaper said, came from the state’s two existing slots parlor operators at Lincoln Park and Newport Grand.

The newspaper added that Harrah’s spent more than $6 million just in the final two weeks of the campaign, largely on advertising, consultants and pollsters.

Rich contact

For weeks, Gaming Partners International Corporation (GPIC) has said it was focusing its marketing efforts on gaming chips imbedded with its RFID microchip. Last week, the company received an order for 950,000 gaming chips that will include a number of RFID-capable chips.

The company said the order came from Holland Casinos, which operates 14 casinos in the Netherlands. The contract was given a value of $2.45 million.

Gaming Partners said the chips would be manufactured by the company’s subsidiary, GPI SAS, in Beaune, France, with delivery expected to be made before year end.

According to the announcement, the chips will not only include a radio-fequency for easy monitoring but also will have a see-through rim as special UV pigment in the rim and edge inserts, making them more difficult to compromise or counterfeit.

On another matter, the company notified the Securities and Exchange Commission that it had hired David Grimes as its new chief financial officer. And, the company added, Gay Nordfelt who was named corporate secretary.

Nasdaq IPO

If things go according to the company’s plan, the new joint venture, Melco-PBL Entertainment will begin trading under the symbol MPEL.

The company, formed in November, 2004, melds James Packer’s Publishing and Broadcasting Ltd. and Lawrence Ho’s Melco International Development. Packer is the son of the late Kerry Packer, who often gambled millions of dollars in Las Vegas casinos during the 1990’s, while Ho is the son of Macau gambling magnate Stanley Ho.

Each company anted up $163 million to form the joint venture.

The company hopes to offer 14% of its company, or 53 million American Depository Receipts (ADR) at a price of $16 to $18 each, thus raising the value of the company to $7 billion. The major attraction will be the Macau gambling sub-license the company bought for $900 million from Wynn Resorts Ltd. (WYNN).

Melco-PBL is in the process of completing its first casino, called Crown Macau, which is slated to open in the second quarter of 2007.

Hard Rock sale

Rank Group Plc of the United Kingdom, looking to focus its business interest on European gambling, has agreed to sell its Hard Rock empire to the Seminole Tribe of Florida. Purchase price was given as $965 million.

Involved are 124 Hard Rock Cafes, four Hard Rock Hotels, two Hard Rock Casino Hotels, two Hard Rock Live! Concert venues, and stakes in three unbranded hotels.

Not included is the Hard Rock Hotel/Casino in Las Vegas that was owned by Peter Morton and was sold to Morgans Hotel Group Co. for $770 million last May.

Morton, the Hard Rock brand co-founder, sold his interest in the company to the Rank Group in 1996 for $410 million.

The Seminoles currently operate two Hard Rock hotel/casinos in South Florida, as well as five other casinos.

THE INSIDER: International Game Technology (IGT) has declared a regular quarterly dividend of $0.13 per share to be paid on Jan. 2 to shareholders of record on Dec. 19.

Arlington Park racetrack in Chicago, Ill., a subsidiary of Churchill Downs Inc. (CHDN) will install an artificial race surface for the 2007 race meeting. Also, the corporation announced that Andrew Skehan, chief operating officer, has left the company.

MGM MIRAGE Inc. (MGM) says it is working to form a joint venture to build luxury non-gambling hotels and resorts in Abu Dhabi, Las Vegas and the United Kingdom. The joint venture will be with Mubadala Development Co. of the United Arab Emirates.

Cash Systems Inc. (CKNN) has a new agreement with Fidelity Bank for a vault, or ATM cash service, that will last for two years and reduce the cost by some 20%.

It may become the largest tourist attraction in West Memphis, Ark., but according to state officials Southland Park Gaming and Racing will not be eligible for tax credits reserved for tourism attractions.