September 27

Harrah's Entertainment Inc. and Caesars Entertainment Inc. have signed a deal to sell four casinos as a package deal to an affiliate of Colony Capital LLC for a reported $1.24 billion.The casinos involved include Harrah's Tunica, Bally's Tunica, Harrah's East Chicago, and Atlantic City Hilton.

The sale price reflects nearly 8.5 times the total combined proceeds generated by the four properties, which is also higher than other casino deals in the recent past have been.

Harrah's said it does not feel that there will be any after-tax gain or loss from the sale to be reported. They are planning to utilize the approximate $475 million in efforts to reduce their current debt.

It is noted that there are other interested parties willing to negotiate a deal for a limited period of time.

Harrah's and Caesars last month announced that they began to talk with Colony in order to sell the properties in affiliation with Harrah's $9.4 billion agreement to merge with Caesars. The companies say that the sales were not dependant upon the merger agreement.

Today, both companies released a statement. It said that they still expect to move-on with the merger  before the middle of the year 2005.

Harrah's Chief Executive said Tunica properties and customers at Harrah's East Chicago and will still be able to build-up Total Rewards loyalty club credits until Colony takes over the properties.

A spokesperson for Harrah's says that right now there are no plans to sell any of the other Harrah's properties along with the merger.

The spokesperson for Colony Capital said the company is poised to enlarge its gaming conglomerate.
He also added that the specifics have not been ironed-out, but he believes the company will take-on initiatives in marketing and branding for all the properties owned by Colony.

The private equity firm that is based out of Los Angeles, financed this year's $280 million purchase of the Las Vegas Hilton from Caesars. Colony previously owned the Harvey's casino in South Lake Tahoe and owns Resorts International in Atlantic City. The company focuses on real estate and has investors that include state and private company pension funds.