NEW YORK (Reuters) – Harrah’s Entertainment Inc., one of the world’s largest casino operators, said on Tuesday it could not guarantee that it will generate enough cash to meet its debt payments due to a deep recession.
The operator of 53 casinos may not be able to borrow to fund its operations, and it may have to sell assets if it is unable to pay its debt, according to a U.S. Securities and Exchange Commission filing.
Harrah’s, which was bought in January 2008 by affiliates of Apollo Global Management LLC and TPG Capital LP [TPG.UL] in a deal valued at about $30 billion, has $24.5 billion face value of outstanding debt, according to the filing.
The casino industry has been hard hit by a sagging economy that coincided with several large new projects adding to supply. Revenues have declined and left operators, which have high fixed costs, unable to meet debt payments.
Trump Entertainment Resorts Inc (TRMPQ.PK) and Tropicana Entertainment LLC have filed for bankruptcy and others have signaled they may seek protection from creditors.
Harrah’s said it was cutting managers’ pay by 5 percent and suspending the company’s contribution to employee retirement accounts. The company has also announced a deal to cut its debt and has slowed or delayed new construction to reduce costs.
Harrah’s said on Friday that revenues fell 6.5 percent last year to $10.1 billion and it reported a loss of $4.3 billion, compared to a profit of $1.7 billion in 2007. (Reporting by Chelsea Emery and Tom Hals; Editing by Brian Moss)