Harrah's Entertainment Could Be Forced to Sell Casinos

The gambling operator reported multi-billion dollar losses for last year, and company officials say revenues this year may not be enough to meet debt payments.

Harrah's Entertainment, the world's largest gaming company, is on the verge of bankruptcy and may have to sell casinos and other assets to stay afloat. The gambling operator reported multi-billion dollar losses for last year, and company officials say revenues this year may not be enough to meet debt payments.

Harrah's faces almost $25 billion in debt, much of which was generated to take the company private last year. Owners Apollo Global Management and TPG Capital have started purchasing second-lien debt in case of bankruptcy.

If bankruptcy is filed, second lien holders most likely will receive company equity. By buying these loans, the companies have a better chance of retaining control of Harrah's.

Harrah's told the SEC it is uncertain whether credit markets will thaw in time for the company to borrow enough to restore liquidity. Some of its fifty-three casinos may have to be sold if terms cannot be renegotiated.

The move to take the company private occurred just before the beginning of the economic downturn. Since then revenues have declined dramatically in the casino industry, especially at Las Vegas and Atlantic City destination resorts.