LAS VEGAS, Sept. 27, 2004 - Harrah's Entertainment, Inc. (NYSE: HET)
and Caesars Entertainment, Inc. (NYSE: CZR) today signed a definitive agreement
to sell Harrah's East Chicago, Harrah's Tunica, Atlantic City Hilton and
Bally's Tunica to an affiliate of Colony Capital, LLC.
The agreement calls for the Colony unit to pay a combined total of about
$1.24 billion for the four properties. The sale price represents approximately
8.5 times the trailing 12-month Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA) of the four properties.
Under
terms of the agreement and subject to customary approvals, Colony will
purchase the assets of the four properties and assume certain related current
liabilities. One of the few private investment firms licensed in gaming,
Colony owns Resorts International in Atlantic City and the Las Vegas Hilton.
Colony also is a partner in Accor Casinos in Europe.
Harrah's and Caesars agreed to sell the four properties in connection
with the $9.4 billion merger agreement they announced July 15, 2004, although
the sale is not conditioned on closing of the merger.
State regulatory agencies and the Federal Trade Commission are reviewing
the Harrah's-Caesars merger, which the companies expect to be consummated
by mid-2005.
"We are very proud of the successful businesses built by the employees
of Harrah's East Chicago and Harrah's Tunica, and know their dedication
and professionalism will serve Colony well," said Gary Loveman, Harrah's
Entertainment president and chief executive officer.
"Customers will continue to be able to earn credits with their Total
Rewards loyalty cards at these two Harrah's properties until Colony assumes
control of them," Loveman said.
Harrah's expects to report no material after-tax gain or loss from the
sale. Harrah's plans to use the approximately $476 million in after-tax
proceeds it expects to receive from the sale to reduce debt. The Tunica
and East Chicago properties will be reported as assets held for sale until
closing.
"This transaction will enable Caesars to accelerate our goal of reducing
our indebtedness below $4 billion and our debt ratio to less than 3.75
times EBITDA," said Wallace R. Barr, Caesars Entertainment president and
chief executive officer.
After applying to debt reduction the anticipated $480 million in after-tax
proceeds of the sale of its two properties, Caesars' indebtedness will
total approximately $3.7 billion, or approximately 3.6 times the company's
trailing 12-month EBITDA as of June 30, 2004, excluding the result of the
two properties.
Caesars Entertainment expects to report a gain on sale in the quarter
in which the transaction closes. Until the sale is completed, the Atlantic
City Hilton and Bally's Tunica will be accounted for as assets held for
sale.
"We are honored to be able to acquire these assets from two of the most
prestigious gaming companies in the world," said Thomas J. Barrack, chairman
and CEO of Colony Capital. "Both Harrah's and Caesars have positioned and
nurtured these properties for continued growth and profitability. We look
forward to meeting and working with the dedicated employees at all four
casinos."
Various subsidiaries of Harrah's Entertainment, Inc. own or manage 28
casinos in the United States, primarily under the Harrah's brand name.
Founded 66 years ago, Harrah's Entertainment is focused on building loyalty
and value with its valued customers through a unique combination of great
service, excellent products, unsurpassed distribution, operational excellence
and technology leadership.
Caesars Entertainment, Inc. is one of the world's leading gaming companies.
With $4.5 billion in annual net revenue, 28 properties on four continents,
26,000 hotel rooms, two million square feet of casino space and 53,000
employees, the Caesars portfolio is among the strongest in the industry.
Caesars casino resorts operate under the Caesars, Bally's, Flamingo, Grand
Casinos, Hilton and Paris brand names. The company has its corporate headquarters
in Las Vegas.
For the past 13 years, Colony Capital has invested more than $10.5 billion
in over 7,500 assets through various corporate, portfolio and complex property
transactions. Led by Thomas J. Barrack, Jr., Chairman and CEO, the firm
has been one of the world�s largest independent acquirers and financiers
of real estate-related assets. Colony has a staff of more than 100 and
is headquartered in Los Angeles, with offices in New York, Paris, London,
Madrid, Rome, Beirut, Hawaii, Hong Kong, Tokyo, Taipei, Shanghai and Seoul.
In connection with Harrah's proposed acquisition of Caesars
(the "Acquisition"), Caesars and Harrah's intend to file relevant materials
with the Securities and Exchange Commission (SEC), including a registration
statement on Form S-4 that will contain a prospectus and a joint proxy
statement. INVESTORS AND SECURITY HOLDERS OF HARRAH'S AND CAESARS ARE URGED
TO READ THE PROSPECTUS AND JOINT PROXY STATEMENT WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT HARRAH'S, CAESARS
AND THE ACQUISITION. The proxy statement, prospectus and other relevant
materials (when they become available), and any other documents filed by
Harrah's or Caesars with the SEC, may be obtained free of charge at the
SEC's website at www.sec.gov. In addition, investors and security holders
may obtain free copies of the documents filed with the SEC by Harrah's
by directing a written request to: Harrah's Entertainment, Inc., One Harrah's
Court, Las Vegas, Nevada 89119, Attention: Investor Relations or Caesars
Entertainment, Inc., 3930 Howard Hughes Parkway, Las Vegas, Nevada 89109,
Attention: Investor Relations. Investors and security holders are urged
to read the proxy statement, prospectus and the other relevant materials
when they become available before making any voting or investment decision
with respect to the Acquisition.
Harrah's, Caesars and their respective executive officers
and directors may be deemed to be participants in the solicitation of proxies
from the stockholders of Caesars and Harrah's in connection with the Acquisition.
Information about those executive officers and directors of Harrah's and
their ownership of Harrah's common stock is set forth in the Harrah's Form
10-K for the year ended December 31, 2003, which was filed with the SEC
on March 5, 2004, and the proxy statement for Harrah's 2004 Annual Meeting
of Stockholders, which was filed with the SEC on March 4, 2004. Information
about the executive officers and directors of Caesars and their ownership
of Caesars common stock is set forth in the proxy statement for Caesars'
2004 Annual Meeting of Stockholders, which was filed with the SEC on April
16, 2004. Investors and security holders may obtain additional information
regarding the direct and indirect interests of Harrah's, Caesars and their
respective executive officers and directors in the Acquisition by reading
the proxy statement and prospectus regarding the Acquisition when it becomes
available.
This communication shall not constitute an offer to sell
or the solicitation of an offer to sell or the solicitation of an offer
to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any
such jurisdiction. No offering of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
Safe Harbor
This document includes "forward-looking statements" intended
to qualify for the safe harbor from liability established by the Private
Securities Litigation Reform Act of 1995.
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