Harrah's Pulls IPO Due To "Market Conditions"
Once again we are left scratching our heads how a market trading near its year highs can constitute a "market condition" out for an IPO, but that's precisely what happened to mega LBO Harrah's which as of this morning is no longer going private. Of course, the only market condition involved is not having Getco as your DMM, which is willing to bid up all shares below a certain threshold, only to subsequently go ahead and cell to Citadel in dark pools. Where those shares go afterwards, only Brian Sack knows. The biggest loser however in today's fiasco is John Paulson who is now stuck with holding $710 million of equity in a company that may or may not be viable post the tens of dividend recap deals that are sure to follow the failed IPO.
Harrah’s Entertainment Inc., the world’s biggest casino company, said that it terminated its $531 million initial public offering due to market conditions.
The casino company taken private by Apollo Global Management LLC and TPG Capital was scheduled to sell 31.3 million shares for $15 to $17 yesterday, according to a filing with the Securities and Exchange Commission and data compiled by Bloomberg. Las Vegas-based Harrah’s planned to change its name to Caesars Entertainment Corp. before the initial offering.
The IPO was the last of four scheduled for companies backed by buyout firms in the biggest week for U.S. initial sales since March 2008. Almost 40 percent of IPOs led by private equity funds have left buyers with losses this year, data compiled by Bloomberg show.
Harrah’s “today announced that it is not pursuing its initial public offering of common stock at this time due to market conditions,” the company said in a statement.
The stock scheduled to be sold by Harrah’s in the IPO was in addition to $710.3 million of shares registered for sale by John Paulson’s Paulson & Co. hedge fund. He agreed in June to acquire almost 10 percent of Harrah’s by swapping bonds bought at a discount.
Leon Black’s New York-based Apollo and David Bonderman’s TPG took Harrah’s private for $30.7 billion, including debt and transaction costs, in January 2008.