Harrah's Plans Planet Hollywood Invasion

(MoneyWatch)  Harrah's Entertainment confirmed its plans to try to take over the Planet Hollywood resort on the Las Vegas Strip. Planet Hollywood is in default to the tune of $870 million and is now being run by its lenders, according to the Las Vegas Sun. Harrah's already bought $140 million of the resort's debt.

Harrah's chief executive Gary Loveman wrote to employees in an e-mail:

The Planet Hollywood resort is currently in default to its lenders. As a result of our purchase of their debt, we are working on a plan that also would allow Harrah's to own and manage the property. This is an attractive proposition because of Planet Hollywood's proximity to our other resorts on the Strip, its high-quality product offering and its strong brand name.

Harrah's itself is not in the best position, it's $19 billion in debt. However, many believe its owners, Apollo Global Management and Texas Pacific Group Capital have enough money to complete the deal without problems. In March of this year, both parent companies planned a debt-exchange offer to bondholders, which involved trading current debt for new notes at a higher interest rate or a higher position, to cut some of its then $23 billion debt.

While most of the casino operators on the Las Vegas Strip are in hock, including Harrah's, MGM Mirage and Las Vegas Sands, I suppose there has to be a time that even struggling casino moguls recognize a deal and have to acquire it. My only concern is that Harrah's parent companies have also been showing interest in the bankrupt Fountainebleau Las Vegas which will be sold at auction in January. The auction price, around $50 million, isn't the problem, it's the $1.5 billion needed to finish the almost-completed casino resort.

So are Harrah's parent companies so loaded they can take on more than a billion dollars? Or will they be sated by Planet Hollywood alone?