Problems for Planet Hollywood Towers by Westgate

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http://www.lasvegassun.com/news/2009/sep/15/harrahs-buys-planet-hollywood-debt/

Harrah’s buys Planet Hollywood debt By Liz Benston (contact)

Tuesday, Sept. 15, 2009 | 10:59 a.m.

Deteriorating financial results at the Planet Hollywood casino resort have forced the property to negotiate with lenders to stay afloat – raising the possibility that the property will file for bankruptcy protection as an alternative to reorganizing debts out of court.

In an opportunistic bet for or against its next-door competitor on the Strip, Harrah's Entertainment, according to sources who declined to be named, has purchased a chunk of Planet Hollywood's $860 million mortgage loan.

The investment might position Harrah's to take over Planet Hollywood if the property enters bankruptcy but could also serve as a passive investment that appreciates in value if the economy rebounds or the property's fortunes improve, according to investment analysts not involved in the deal.

Spokespeople for Harrah's and Planet Hollywood declined comment.

Planet Hollywood defaulted on its mortgage loan in August after the resort's performance worsened over the summer.

The loan came due last year but Planet Hollywood exercised an option to extend the maturity date by a year, to December 9. The loan agreement includes a three year extension option that is subject to the payment of a fee and other requirements, according to a second quarter analysis prepared by Deutsche Bank.