As Harrah’s Entertainment prepares to open the meetings before the Kansas Lottery Gaming Facility Review Board today in Belle Plaine, a report critical of their financial picture and violations of federal and state laws in other areas where they operate has been released to the board, Kansas Gov. Kathleen Sebelius and other state officials.
The release was made Wednesday afternoon by the International Union of the United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) including the UAW Kansas Community Action Program.
The picture the UAW paints for Harrah’s finances is not pretty – stating bonds are at risk of default under high debt and the company risks bankruptcy under the weight of that debt.
It draws on research of the Apollo Global acquisition and leveraged buyout firm TPG, which the report says left Harrah’s Entertainment over-leveraged and on unclear footing with bankers who had been previously secured for financing their Sumner County casino project.
According to the UAW report, the state needs to take a better look at the financial picture of Harrah’s Entertainment as it stands now – which is much different from last October when the state received a go-ahead from analyst Richard Scheutz in a report for the Kansas Lottery Commission.
Analysts from UAW compare the leveraged-buyout of Harrah’s Entertainment to the sub-prime mortgage crisis in the housing market today, and say these types of business deals are approaching a credit crisis which could lead to the banks ultimately owning the leveraged-out companies.
Analysts from Reuters News Service, Bloomberg, and others are also quoted in the report with strong concerns for the future of Harrah’s Entertainment.
The UAW report also details several violations of state and federal laws related to building and fire codes in casinos owned and managed by Harrah’s Entertanment. According to the report, in Las Vegas Harrah’s two senior employees currently face criminal charges for violations of building and fire codes which may have put the public at risk.
These concerns undermine the need for the state to take a better look at the potential Sumner County casino operator, the report reads, stating emphatically Harrah’s Entertainment would be a bad bet for Kansas.
Wellington, Kan. —
