The 2008 leveraged buyout of the casino firm had been done just before the financial crisis. Apollo and TPG each spent $1.325 billion of their investors' money for 23% stakes in the company. The firms piled on another $12 billion of new debt to help pay for the transaction, which closed just before casino revenue collapsed, the Journal reported. Harrah's was pushed to the brink as the financial crisis raged.
Apollo and TPG cut a series of deals to reduce Harrah's debt by at least $5 billion, while extending most debt maturities until 2015, the WSJ reported. They also have cut costs by $500 million. But Harrah's remains among the most highly indebted of all major casino companies.
However, the IPO may be just as bold a move as the buyout, as investors remain wary of IPOs from private-equity firms. The Journal further assumes the company's equity is worth about $4.5 billion. But analysts are cautioning about the success of the IPO.
For growth, Harrah's sees opportunities in the potential for new gambling markets in the U.S., as well as in the overall rise in travel spending. And Internet gambling, though still illegal in the U.S., could be a big boost if that changes.
The IPO proceeds will be used for new casino projects in Las Vegas and Ohio, the Journal reported.