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Harrah's Entertainment cuts 200 jobs in corporate office29 January 2007
By Howard Stutz
LAS VEGAS, Nevada -- Harrah's Entertainment eliminated some 200 jobs in its Las Vegas corporate office Friday, saying the layoffs have nothing to do with the planned $27.8 billion leveraged buyout of the casino operating giant by two private equity groups.
The company notified employees in a memo early Friday morning that positions in aviation, food-and-beverage, hotel operations, design and construction and government relations were being eliminated. The jobs were primarily in the range and classification considered as "middle management," a source familiar with the reductions said.
Sources confirmed that 40 corporate employees were let go before Thursday and another 100 employees were being informed of their job status during the day Friday. Sources said that 60 job positions now unfilled would be eliminated and another 30 corporate workers were transferred to other jobs in the company.
"We're doing everything we can to be supportive and help these employees," said Jan Jones, Harrah's senior vice president of communications and government relations. "Not only have we given them a pretty good severance package, but we're offering job placement counseling and we're trying to redirect some people to positions at the properties. This is always difficult, but sometimes in business we have to make decisions that are fiscally responsible."
In December, Harrah's board of directors approved a deal in which Texas Pacific Group and Apollo Management will pay $90 a share for all of the company's outstanding shares and assume $10.7 billion in debt. The transaction is expected to take all of this year to finalize.
When the buyout was announced Dec. 19, the private equity groups said Harrah's Chairman and Chief Executive Officer Gary Loveman and other members of the Harrah's management would stay on and manage the casino operations.
Jones said the buyout was not the reason for the job reductions. The company's expansive growth over the last few years led to an increased number of job positions in the corporate offices. Among the company's deals were the acquisition of Showboat Inc. in 1998 for $1 billion, the $1.45 billion buyout of Horseshoe Gaming in 2004 and the $9 billion buyout of Caesars Entertainment in 2005.
Harrah's executives, during the company's most recent quarterly conference calls with Wall Street analysts and investors to discuss earnings, have cited the need to address rising corporate overhead costs.
"We've been growing so fast that we needed to stop, take a breath," Jones said, adding that additional corporate staffing reductions are being considered in the information technology, finance and human resources departments.
Sources said Harrah's had hoped to reduce corporate expenses by 20 percent, or between $150 million and $200 million annually.
Harrah's, which operates almost 40 casinos in 13 states and internationally, runs six properties on the Strip -- Harrah's, Caesars Palace, Flamingo, Imperial Palace, Bally's and Paris Las Vegas -- and the Rio. The company acquiring the Barbary Coast from Boyd Gaming Corp.
Sources said the job cutbacks were only in the corporate headquarters and did not stretch into the individual properties.
Jones said the resignations earlier this month by Harrah's Chief Operating Officer Tim Wilmott, Central Division President Anthony Sanfilippo and Senior Vice President Tony Santo weren't related to Friday's events. Wilmott was considered the No. 3 person in the Harrah's chain of command behind Loveman and Charles Atwood, vice chairman of Harrah's board of directors.
Sources said corporate employees were all informed of the pending layoffs in a letter from Loveman. In the letter, Loveman said the employees being eliminated had contributed greatly to the company's success over the past few years.
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Harrah's Entertainment cuts 200 jobs in corporate office is republished from Online.CasinoCity.com.