The long-awaited IPO from Harrah’s Entertainment was cancelled last month after it encountered what a release called unfavorable “market conditions.” The company was preparing to price the IPO when the deal was scrapped.
The plan would have garnered Harrah’s at least $500 million that was to have been used to build an entertainment district on the Las Vegas Strip between the Flamingo and the Imperial Palace that included a huge Ferris wheel. Proceeds were also going to the completion of an expansion program at Caesars Palace, as well as funding for two Ohio casinos with partner Rock Venture. It’s unclear if these projects would go back on the shelf along with the IPO.
The related sale of more than 30 million shares of the company owned by the Paulson & Co. of New York, a hedge fund operated by billionaire John Paulson, will proceed, however. Paulson invested $550 million in the company last June, but the company has several years to pay him back.
The planned name change from Harrah’s to Caesars Entertainment, a long-planned change designed to take advantage of the importance of gaming’s most powerful brand, did go through, however. The Harrah’s board has approved the change back in 2008.
The cancelation of the IPO came after a few weeks of bashing by analysts, some of whom warned about the high risk of the offering, given Harrah’s current debt of almost $20 billion. The performance of the company was also an issue. In the first nine months of 2010, Harrah’s Entertainment reported a loss of $634 million on revenue of $6.7 billion, compared with net income of $272.7 million and revenue of $6.8 billion in the year-earlier period.
Pricing the IPO was also an important issue.