Harrah's buys back majority of notes in tender offer for six note series

By Angela McDaniels

Tacoma, Wash., Jan. 28 - Harrah's Entertainment, Inc. subsidiary Harrah's Operating Co., Inc. has accepted and purchased $374.59 million, or 99.9%, of its $374.74 million floating-rate contingent convertible senior notes due 2024, according to a company news release.

The notes were submitted under a tender offer that expired at 8 a.m. ET on Jan. 28.

In a separate tender offer that also expired at 8 a.m. ET on Jan. 28, Harrah's Operating accepted and purchased $81.15 million, or 32.5%, of its $250 million senior floating-rate notes due 2008; $394.25 million, or 98.6%, of its $400 million 8 7/8% senior subordinated notes due 2008; $131.23 million, or 96.3%, of its $136.29 million 7½% senior notes due Jan. 15, 2009; $424.17 million, or 99.8%, of its $425 million 7½% notes due Sept. 1, 2009; and $299.4 million, or 99.8%, of its $300 million 7% senior notes due 2013.

For each $1,000 principal amount of notes tendered, holders received $1,032.35 for the 8 7/8% notes, $1,038.78 for the 7½% notes due Jan. 15, 2009, $1,063.88 for the 7½% notes due Sept. 1, 2009 and $1,155.56 for the 7% notes.

In each case, the payout included a consent fee of $30.00 for each note tendered by 5 p.m. ET on Jan. 7, the consent deadline.

The company also paid accrued interest up to but excluding the payment date.

The payouts were determined at 2 p.m. ET on Jan. 8 and equal the sum of the present value on the payment date of $1,000 at the securities' maturity date plus interest payments, discounted using the bid-side yield on the reference Treasury plus the spread of 50 basis points, minus accrued interest up to but excluding the payment date.

The reference security was the 3 1/8% Treasury due Sept. 15, 2008 for the 8 7/8% notes, the 4% Treasury due June 30, 2009 for the 7½% notes due Jan. 15, 2009, the 4% U.S. Treasury due Aug. 31, 2009 for the 7½% notes due Sept. 1, 2009 and the 3 3/8% Treasury due Nov. 30, 2012 for the 7% notes.

The payout for the floating-rate notes was $970.00 per $1,000 principal amount, and the payout for the convertibles was $1,379.52 per $1,000 principal amount.

As of the consent deadline, holders had tendered with consents 98.44% of the 8 7/8% notes, 95.81% of the 7½% notes due Jan. 15, 2009, 99.69% of the 7½% notes due Sept. 1, 2009 and 99.71% of the 7% notes.

The consents allowed the company to amend the note indentures to eliminate or make less restrictive substantially all of the restrictive covenants as well as certain events of default and related provisions in the indentures.

The tender offers were being conducted in connection with the previously announced acquisition of Harrah's Entertainment by Apollo Global Management, LLC and TPG Capital, LP, which was completed on Monday.

Citi (800 558-3745 or call collect 212 723-6106) was lead dealer manager for the offers. Global Bondholder Services Corp. (866 924-2200, banks and brokers call 212 430-3774) was information agent.

Harrah's is a Las Vegas-based casino company.

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