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Harrah's, Caesars Selling Four Properties

LAS VEGAS-Harrah's Entertainment and Caesars Entertainment agree to sell four casinos--Harrah's East Chicago, Harrah's Tunica, Atlantic City Hilton and Bally's Tunica--to an affiliate of Colony Capital LLC for more than $1.2 billion.

By Brian K. Miller | Updated on September 27, 2004

LAS VEGAS-Harrah’s Entertainment Inc. and Caesars Entertainment Inc. have signed an agreement to sell four casinos to an affiliate of Los Angeles-based Colony Capital LLC for $1.2 billion. The sale is related to Harrah’s and Caesars’ $9.4-billion merger, which is scheduled to close by mid-2005 pending approval by state regulatory agencies and the Federal Trade Commission.Colony Capital is one of a few private investment firms licensed in gaming. It owns Resorts International in Atlantic City and the Las Vegas Hilton, and also is a partner in Accor Casinos in Europe.The casinos Colony Capital is buying are Harrah’s East Chicago, Harrah’s Tunica, Atlantic City Hilton and Bally’s Tunica. The sale price represents approximately 8.5 times the four properties’ trailing 12-month EBITDA.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. Caesars Entertainment expects to report $480 million in after-tax proceeds in the quarter in which the transaction closes. Caesars’ president Wallace Barr says the transaction will enable Caesars to accelerate its goal of reducing the company’s indebtedness below $4 billion and its debt ratio to less than 3.75 times EBITDA.

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