|MEMPHIS, Tenn., April 15, 1999 - Harrah's Entertainment,
Inc. (NYSE: HET) today announced that in connection with the TABCORP Holdings
Limited (Australia: TAH) intention to offer to acquire the issued and outstanding
shares of Star City Holdings Ltd. (Australia: SCY), Harrah's has agreed
to sell certain of its interests in Star City Casino in Sydney, Australia
to TABCORP, subject to regulatory approvals. Harrah's previously acquired
its interests in the Star City Casino in conjunction with its purchase
of Showboat, Inc. in June 1998. Harrah's current interests in the Star
City Casino consist of:
Harrah's plans to sell its remaining Star City shares and options not purchased directly by TABCORP for cash or through tenders into TABCORP's offers. TABCORP will offer to acquire all of the remaining ordinary and preferred shares of Star City, other than those acquired from Harrah's, for A$1.70 per share in TABCORP stock and cash. The TABCORP offer is conditional upon TABCORP receiving regulatory approval.
Harrah's plans to use the total after-tax proceeds of the sales, estimated at approximately US$220 million, to reduce debt. Closing of the transaction is expected in the latter half of 1999.
In addition to the purchase arrangements detailed above, TABCORP has agreed to contract with Harrah's for certain services for which TABCORP will pay Harrah's approximately A$7 (approx. US$4.5) million annually for three years. In certain circumstances, the amount could be increased to A$10 (approx. US$6.43) million annually.
Ross Wilson, Managing Director and Chief Executive Officer of TABCORP Holdings, stated, "The retention of Harrah's for certain services is an important piece of our overall tender to acquire Star City. Through the services agreement, we will ensure that this casino project maintains the continuity of Harrah's expertise as we continue to build Star City into a world class casino and entertainment facility."
Philip G. Satre, Chairman and Chief Executive Officer of Harrah's stated, "This transaction is a positive proposal for each party involved. Star City is becoming recognized as one of the world's most renowned casino entertainment properties. By aligning shareholders and management through TABCORP, Star City is positioned, both financially and operationally, for continued success."
Mr. Satre continued, "At Harrah's we have carefully considered the strategic fit of the Star City asset into our operating model and multi-market customer base. We have determined that it is in the best, long-term interest of Harrah's shareholders for us to monetize these assets while retaining an operational role."
"The value offered by TABCORP is at a significant premium to the value we assigned to these assets in theacquisition of Showboat," stated Harrah's Chief Financial Officer Colin Reed. "The transaction is expected to be accretive to Harrah's earnings, and the repayment of debt will give us greater financial flexibility in the future."
Mr. Satre added, "I look forward to joining the Board of Directors of TABCORP and to ensuring a smooth transition for Star City Casino post the merger of Star City and TABCORP."
Aspects of the transaction are subject to certain approvals, including Australian regulatory approvals. Morgan Stanley and BT Wolfensohn acted as financial advisors to Harrah's for the transaction.
Harrah's Entertainment, Inc. is the most recognized and respected name in the casino entertainment industry operating 18 casinos in the United States under the Harrah's, Showboat and Rio brand names, and the Star City casino in Sydney, Australia. Founded more than 60 years ago, Harrah's is focused on building loyalty and brand value with its targeted customers through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership.
Star City Holdings Limited owns the Star City Complex located in Sydney.
The complex includes a casino and gaming facility, hotel facilities, theaters,
conference and banquet facilities, restaurants and retail shops. TABCORP
Holdings Limited is a public company based in Victoria, Australia. The
Company will operate in excess of 15,000 gaming machines after its merger
with Star City. It currently provides wagering and gaming services and
facilities in Victoria through its wagering division. The wagering division
sells totalizator bets on horse and greyhound racing and totalizator and
fixed odd bets on sporting events offered through a network of retail and
on-course outlets and by telephone. The gaming division also owns and operates
gaming machines in Victorian hotels and clubs. For the six months ended
December 31, 1998, TABCORP's net operating profit was A$71.5 million and
the Company has a market capitalization of A$3.55 billion.
Statements in this release concerning future events, future performance and business prospects, including the anticipated closing of the transaction and future earnings performance, are forward-looking and are subject to certain risks and uncertainties. These include, but are not limited to, economic, bank, equity and debt market conditions, changes in laws or regulations, third party relations and approvals, decisions of courts, regulators and governmental bodies, factors affecting leverage, including interest rates, ability to consummate the proposed transactions, and effects of competition. These risks and uncertainties could significantly affect anticipated results or events in the future and actual results may differ materially from any forward-looking statements. For additional information, refer to the section entitled "Private Securities Litigation Reform Act" in the Company's Form 10-K filed with the Securities and Exchange Commission for the period ended December 31, 1998.
|Also See:||Grand Opening for Sydney's Largest Casino Complex / Nov 1997|
|Harrah's Targets Opening by End of October 1999 for New Orleans Land Based Casino Project / Nov 1998|
|Harrah's Revenues for 1998 a Record $2.0 Billion, 23.8% Increase Over 1997 / Feb 1999|
|Gaming In The Asia/Pacific - Joining The International Bandwagon / Arthur Andersen|