A $17.7 billion purchase of casino giant Harrah's Entertainment Inc. by private equity buyers Apollo Management and Texas Pacific Group - the world's largest casino buyout deal - won preliminary approval Wednesday from Nevada regulators.
The state Gaming Control Board's unanimous vote for the deal, already approved by Harrah's shareholders and by several other states in which Harrah's Entertainment operates, now goes to the board's parent Nevada Gaming Commission.
That panel will take final action Dec. 20.
Control Board members backed the big going-private deal after being assured by the buyers that they intend to continue pumping funds into Harrah's and that the investors they represent - typically private and public pension funds, endowments and institutions - are top-notch.
"From the standpoint of regulatory control, it probably represents the cleanest money that you could get into the casino industry," attorney Frank Schreck said in outlining terms of the Apollo-TPG venture.
"We intend to be investing in Harrah's for a very long period of time," said Apollo executive Eric Press as he and TPG executive Kelvin Davis told Control Board members they will continue various expansion plans that Harrah's has had in the works.
Gary Loveman, chief executive of Harrah's, will stay on in that role.
Loveman, in line for more than $90 million in stock options and other rights under terms of the buyout, said the deal will enhance Harrah's ability to expand and improve its financial strength.
Stockholders are getting $90 a share and the company gets $6 billion in new equity.
Its debt load increases to $25 billion but Control Board Chairman Dennis Neilander said he's not concerned about the leverage increase given Harrah's stable management and the prudent manner in which Apollo and TPG have operated.
Loveman also rejected as inaccurate claims by a group of activists from west Las Vegas that Harrah's had broken promises to the local black community and hadn't done enough economically for the struggling area.
He said Harrah's has a long-standing employee diversity program.
Loveman also said Harrah's intends to stay in the forefront in its various markets throughout the United States and in Britain, Canada, Uruguay, Egypt and elsewhere, and will benefit by hooking up with two private-equity firms that are "the best of the lot."
Apollo and TPG approached Harrah's separately in August 2006 about taking the company private before teaming up later and offering $81 a share.
A year ago, as other companies joined in the bidding, Harrah's accepted the $90-a-share offer and the regulatory review process began.