Bankers Trust Accelerates Debt for Harrah's New Orleans Casino Project

Strategic Insights -

Bankers Trust, as the administrative agent for a syndicate of lenders, has accelerated the debt for Harrah's Jazz Company's New Orleans casino project after the company failed to make required payments under its management contract. This decision was made following a shutdown of the temporary casino due to financial struggles, with Harrah's Entertainment stating that the project's existing financial structure and increased costs made it unsustainable. Despite the immediate shut down, Bankers Trust remains open to cooperation on a potential restructured casino project.

Key Takeaways:

  • Bankers Trust accelerated the debt for Harrah's Jazz Company's New Orleans casino project after the company failed to make required payments under its management contract with Harrah's Entertainment.
  • The shut down of the temporary casino was due to the financial struggles of the project, with Harrah's Entertainment stating that the existing financial structure and increased costs made it unsustainable.
  • A press release from Harrah's Entertainment stated that the project would need to be restructured to make it viable.
  • The financial information and projections provided by Harrah's to Bankers Trust last week supported the conclusion that the project was not sustainable.
  • Harrah's Entertainment is composed of a subsidiary of Harrah's Entertainment, Inc. (NYSE: HET) and two local partners.
  • The credit agreement with Harrah's Jazz Company was entered into in late 1994.

Statistics:

  • The project failed to make required payments under the management contract with Harrah's Entertainment.
  • The temporary casino in New Orleans was shut down immediately and irrevocably.
  • The debt for the New Orleans casino project was accelerated by Bankers Trust.
  • The project would require restructuring to make it viable, according to Harrah's Entertainment.
  • The restructured project is pending and cooperation from Bankers Trust and other stakeholders.

Sources:

  • Harrah's Entertainment press release
  • Bankers Trust Company /PRNewswire/, Nov. 22, 1995
  • Financial information and projections provided by Harrah's to Bankers Trust (no date specified in original text)