Harrah’s Entertainment recent move last Friday to draw down the $740 million remaining on its $2 billion credit line, could point the company toward financial restructuring that potentially could include bankruptcy filing.
Michael Sullivan, a University of Nevada, Las Vegas finance professor, said that Harrah’s could be hoarding cash for operations in light of the current economic climate or to pay covenants on current borrowing.
Or it could be looking to file a bankruptcy plan.
Bond and gaming analysts have yet to react to the announcement. And Harrah’s executives declined to comment yesterday.
Harrah’s, who told their employees last week it would cut managers’ pay and suspend employees 401(k) contributions during the economic downturn, posted a net loss of $415.1 million from January 1, 2008 through September 30, 2008.
Harrah’s will report their annual results on March 13.