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Arnold M. Knightly

Harrah's shareholders to vote on buyout

5 April 2007

LAS VEGAS, Nevada -- Harrah's Entertainment stockholders plan to meet privately this morning to vote on the future of the company and, possibly, the gaming industry.

On the agenda is a vote on the proposed leveraged buyout of the gaming giant by subsidiaries of the private equity firms Apollo Management and Texas Pacific Group.

Harrah's board agreed in December to a $17.1 billion buyout offer, or $90 per share, by Hamlet Holdings, a joint venture company controlled by the two private equity firms. Hamlet Holdings will also assume $10.7 billion in debt in the deal.

Approval of the buyout requires a simple majority vote.

The deal would be the biggest private equity buyout of a publicly held gaming company and the seventh-largest leveraged buyout in history. If shareholders vote against the action, Harrah's Entertainment would have to pay out-of-pocket expenses to the private equity firms up to $60 million.

A few holdout stockholders agreed in principal Monday to settle a class action lawsuit challenging the buyout in a court hearing that lasted 10 minutes.

The stockholders, which include individual stockholders and a retirement fund, had sued in November, challenging the proposed buyout per share price of $83.50 at the time.

Attorneys for the plaintiffs told District Court Judge Mark Denton that "everybody's happy" with the higher offer.

Even if the stockholders approve the agreement, the deal still has to clear regulatory hurdles, including approval by gaming regulators in the different markets in which the company holds gaming interests.

Frank Schreck, a gaming attorney working with Harrah's, said in February he did not expect the proposal to come before the Nevada Gaming Control Board or the Nevada Gaming Commission until October at the earliest.

The buyout gained regulatory approval of the European Union on Wednesday after the deal received no complaints from rivals. The EU, which rules on mergers where the companies have a joint global revenue of more than $6 billion, also did not find any antitrust problems.

Harrah's owns six casinos in England and has a management contract with a seventh that is scheduled to expire in January.

The world's largest gaming company by revenue owns or operates 48 casinos worldwide, including 13 in Nevada. In Las Vegas the company owns 350 acres, including Caesars Palace, Paris, Bally's, Rio, Bill's, Flamingo, Imperial Palace and Harrah's.

The 8 a.m. stockholders meeting will run at Caesars Palace in one of the salons at the Roman Ballroom. The meeting is open to only stockholders who owned shares before the close of business March 8.

An announcement on the vote is expected later today.

The approval by the stockholders, followed by the consummation of the merger transaction, will lead to the replacement of the current board of directors with designees of Texas Pacific Group and Apollo Management.

Harrah's shareholders to vote on buyout is republished from