Apr 25, 2001 2:20 AM

Harrah’s Entertainment announced today it has agreed to buy Harveys Casino Resorts for $625 million from Colony Capital Investors.

The deal, already approved by the boards of directors of both companies, expands Harrah’s presence in Lake Tahoe gives the company entry into Colorado and the Iowa riverboat market.

Harrah’s will acquire Harveys Resort & Casino in Lake Tahoe, Harveys Casino Hotel and the Bluffs Run Casino, both in Council Bluffs, Iowa, and Harveys Wagon Wheel Hotel Casino in Central City, Colo.

The acquisition does not include Colony’s recent purchase of Resorts Casino Hotel in Atlantic City.

Harveys generated cash flow of $110 million for the fiscal year ended February 28. Harrah’s Chairman and CEO Phil Satre said his company expects to increase that by $25 million in the next 18 months.

Harrah’s will take on Harvey’s outstanding debt of approximately $367 million.

“We believe the synergies between Harrah’s and Harveys are very similar to those we have already achieved from the acquisition of Players International,” Satre said in a prepared statement released. “The Harveys properties are an excellent complement to our existing geographic network of casino locations.”

Prior to the acquisition, Harrah’s operated 21 casinos in 17 gaming jurisdictions nationwide.