The Wall Street Journal-20080114-Deal Journal - Breaking Insight From WSJ-com
Return to: The_Wall_Street_Journal-20080114
Deal Journal / Breaking Insight From WSJ.com
Harrah's Loan: Chrysler Again?
---
Long Week May Be Ahead
As BofA, Deutsche Bank
Try to Sell Buyout Debt
Stocks are swooning and Treasury bonds rallying, as concerns mount about the fallout from the subprime-mortgage downturn. Not exactly the ideal time to bring a big, risky debt sale to market.
That hasn't deterred Bank of America and Deutsche Bank from proceeding with sales of as much as $9 billion of loans backing the leveraged buyout of Harrah's Entertainment by TPG (formerly Texas Pacific Group) and Apollo Management.
BofA and Deutsche Bank tomorrow will hold a meeting to launch the Harrah's loan sale, according to a Standard & Poor's Leveraged Commentary & Data report Friday. The sale was sort of delayed once, when a tentative start date of this past Thursday was pushed back. Given the state of the markets, another delay or a significant shortfall in the proceeds can't be ruled out. Indeed, S&P says the banks may offer only part of the debt to the market this week. Stories are circulating on Wall Street about the banks clashing with TPG and Apollo over the banks' desire to sweeten the terms of the debt to make it easier to sell to investors -- and get it off their books. (A person in the buyout group dismisses such talk.)
With the Dow industrials falling 247 points Friday and the yield on the two-year Treasury note (an indicator of recession sentiment) hitting a three-year-plus low, the question is whether Harrah's will prove to be another Chrysler. A $4 billion debt sale related to the auto maker's buyout was pulled in November, the second such move, when poor market conditions sapped credit investors' appetites. It still is on ice -- not encouraging for the Harrah's underwriters.
If market sentiment doesn't turn around fast, this week could turn out to be a long, trying one for Deutsche Bank and BofA bankers.
-- Dana Cimilluca
IAC Is Close
To Flixster Deal
Barry Diller could be heading back to the movie business. Well, in a manner of speaking.
On-again, off-again talks between IAC/InterActiveCorp, which Mr. Diller runs, and Flixster, a social-networking site for movie fans, have heated up again and a deal could be near, say people familiar with the situation. An agreement could come this week, one says.
Of course, the two parties have been down this road before, having almost reached an agreement in December, the people noted. There is no guarantee talks won't break down again. If a deal is reached, it is likely to be at a lower price than the roughly $150 million Flixster, of San Francisco, was asking for last year.
Flixster would beef up IAC's presence in social networking and comes as the media conglomerate plans to spin off four major business units this summer, including HSN home-shopping network and Ticketmaster, realigning itself around search engine Ask.com.
-- Jessica E. Vascellaro
