LAS VEGAS, Jan. 15, 2001 - Harrah�s Entertainment, Inc. (NYSE:
HET), said today that its board of directors has approved the company�s
participation in the proposed bankruptcy reorganization plan filed by JCC
Holding Co., owner of the Harrah�s New Orleans Casino. Harrah�s Entertainment
owns 43 percent of JCC Holding.
| JCC Holding announced Friday that
other principal creditors and bank lenders have agreed to the proposed
plan. JCC also said Louisiana Gov. Mike Foster�s administration has agreed
to a plan proposal to reduce the minimum annual payment to the state and
the guaranty required for those payments.
JCC Holding said New Orleans Mayor Marc Morial and the City Council
have committed to a $5 million reduction in certain payments the casino
makes to the city.
If JCC Holding�s proposed plan is completed, it could put the New Orleans
casino on a stable financial footing. However, the Louisiana Legislature
must approve, among other things, a reduction in the minimum payment for
the reorganization to proceed, and others must also approve all facets
of the proposed plan.
JCC Holding�s monthly revenues, which have averaged approximately $19.7
million since opening in October 1999, have been inadequate to support
its current capital structure, minimum payments to the State of Louisiana
and costs associated with the ground lease from the City of New Orleans.
Based on its projections, JCC said, its plan should enable the restructured
company to meet its future financial obligations.
Under the proposed plan:
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About $500 million of debt would be eliminated;
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Current equity would be eliminated;
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Current JCC Holding bondholders and bank lenders would own 51 percent of
the restructured company;
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Harrah�s Entertainment would own 49 percent, in exchange for debt it would
give up;
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Harrah�s would appoint three members of a new seven-member board of directors;
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Harrah�s would hold about $50 million of the restructured company�s $125
million of total debt;
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The reorganized JCC would obtain a new $35 million revolving-credit facility,
which may be provided or guaranteed by Harrah�s;
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Casino Owner, JCC Holding
Company, Files Disclosure Statement Outlining Agreement With Bondholders,
Banks and Harrah�s Entertainment, Inc.
NEW ORLEANS, Jan. 12, 2001 - JCC Holding Company (�JCC�),
the owner of Harrah�s New Orleans Casino, announced today that it has reached
an agreement with Harrah�s Entertainment, Inc. (NYSE: HET) (�HET�), and
its other principal creditors represented by the Official Bondholders Committee
and the bank group to support the plan to restructure JCC�s debt and capital
structure adopted by the JCC Board of Directors. The agreement is
based upon a proposal for restructuring originally presented by Jefferies
& Co., JCC�s investment bank advisors, at the November 13th meeting
of the Casino Tax Advisory Committee appointed by Mayor Marc Morial to
study the casino issue.
The agreement, which was submitted today in a filing with
the Bankruptcy Court, will, if approved by the Court, reduce the casino�s
debt from more than $500 million to approximately $125 million. The
restructured company will be owned by current JCC bondholders and the bank
group (51%) and HET (49%).
The company also acknowledged that it has reached an agreement
with the Foster administration regarding certain other elements of the
proposed restructuring, including a reduction in the minimum annual payment
to the State and the guaranty required for these payments. However,
JCC cautioned that an early special session and prompt legislative approval
of the proposed State changes are essential to the success of the restructuring
plan.
On a related matter, JCC expressed its encouragement over
the announcement today of the support of the City of New Orleans expressed
in a press conference attended by Mayor Marc Morial and members of the
City Council. The Mayor and the Council endorsed JCC�s efforts in
restructuring, including a State minimum payment reduction, and committed
the City to a $5 million reduction in certain payments made to the City
and payments and expenses required by the lease between JCC and the City.
JCC�s Harrah�s New Orleans Casino remains open and will
continue operations during the bankruptcy proceedings, subject to the goal
of consummation of the bankruptcy plan by March 31, 2001. No disruptions
in employment or operations are expected during this time unless the relief
sought by JCC is not obtained and a bankruptcy plan cannot be timely approved
by the Bankruptcy Court and consummated by March 31, 2001.
Jazz Casino Company, LLC, a subsidiary of JCC Holding
Company, has the exclusive license to own and operate the only land-based
casino in Orleans Parish. Harrah�s New Orleans Management Company,
a subsidiary of Harrah�s Entertainment has the contract with Jazz Casino
Company to manage the casino. The casino directly employs approximately
3,000 people earning wages, benefits and tips of over $100 million annually.
The 100,000 square foot casino is located at Canal Street at the Mississippi
River in downtown New Orleans and is adjacent to the French Quarter, the
Aquarium of the Americas and the Ernest N. Morial Convention Center.
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The management fee JCC would pay Harrah�s Entertainment would change. The
current fee, which is a base fee of 3 percent of net revenue, would change
to an entirely incentive-based fee that would be 30 percent of earnings
before interest, income taxes, depreciation, amortization and management
fees;
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Food and hotel restrictions on Harrah�s New Orleans would be relaxed, allowing
JCC greater flexibility in offering food and hotel services;
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The minimum payments JCC must make to the State of Louisiana would change
to $50 million in the first year and $60 million thereafter. The
current minimum payment is $100 million annually;
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Harrah�s Entertainment would guarantee JCC�s minimum annual payment obligations
to the State of Louisiana for four years. The minimum-payment guarantee
provides for Harrah�s Entertainment to guarantee Louisiana up to $50 million
in the first year, and $60 million each in the subsequent three years;
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Costs associated with the City lease would be reduced by $5 million annually.
Founded more than 60 years ago, Harrah�s Entertainment, Inc. is the most
recognized and respected name in the casino-entertainment industry, operating
21 casinos in the United States under the Harrah�s, Showboat, and Rio brand
names.
This release includes �forward-looking statements� intended to qualify
for the safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995.
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