Harrah’s Wins OK to Take Over Planet Hollywood Casino
Harrah’s Entertainment Inc., the world’s biggest casino operator, won approval from Nevada regulators to take over the Planet Hollywood Resort & Casino on the Las Vegas Strip after the owner defaulted.
The Nevada Gaming Commission agreed today to let Harrah’s buy the resort by converting $306 million of Planet Hollywood debt into equity and investing an additional $30 million. Harrah’s also takes on the Las Vegas Strip property’s remaining $554 million mortgage, an e-mailed presentation shows.
The deal gives Harrah’s a neighboring property for much less than it would cost to build, CEO Gary Loveman said in a December interview. He plans to keep the Planet Hollywood brand to appeal to younger visitors. Harrah’s, based in Las Vegas, began buying the debt at a discount to face value in September after Planet Hollywood defaulted on an $860 million mortgage.
The loan is in special servicing after owner BH/RE LLC, a partnership between Robert Earl, chairman and chief executive officer of Planet Hollywood International, and private equity firm Bay Harbour Management LC, missed interest payments, according to regulatory filings.
The mortgage is secured by the property’s assets and will mature in December 2011 with two extension options through April 2015, according to the presentation. Loan interest is 1.533 percentage points over Libor, the same as the existing mortgage, according to Bloomberg data.
The Planet Hollywood casino, formerly Aladdin, is located on the northeast corner of Las Vegas Boulevard and Harmon Avenue, next to Harrah’s Paris Las Vegas Hotel & Casino.
Starwood Hotels & Resorts Worldwide Inc. owned about 11 percent of the casino at the start of 2009. The company’s stake was diluted from 15 percent when it declined to provide cash in December 2008.