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Harrah's Exchanges Debt to Lower Exposure for Gambling Operator
LAS VEGAS, NEVADA --
Harrah's Entertainment announced it had reached an agreement with bondholders to buy back about $5.5 billion in debt. The casino gambling company will exchange cash and new notes worth about $3.5 billion to replace the old bonds.
Harrah's is striving to lower the massive debt it incurred when the company went private a little over a year ago. Immediately after the loans were made to take the company private, the recession hit, leaving the gaming operator with no cash on hand and rapidly declining earnings.
The company reported almost $23 billion in total debt at the end of 2008. Rumors had spread that the company would be forced to sell off casinos to raise enough cash to meet its obligations.
The new notes were issued at a higher rate of interest, and won't come due until 2018. Expiring bridge loans worth $442 million were also replaced with new notes, worth $297 million.
Harrah's said it had tendered the offer to two-thirds of its eligible debt.
The company hopes to be able to continue restructuring debt to allow time for economic recovery before facing maturing loans.
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