Who "Controlled" Harrah's Entertainment?

In today's news, Harrah's appears to be a desired target of private-equity firms, Apollo Management and Texas Pacific Group, according to this Forbes article. It also says that "Investors rushed to put their money on the casino giant, pushing shares up 14.5% or $9.69 to $76.02 in early afternoon trading on the New York Stock Exchange."

Before I say any more, let's take a close look at current ownership.

Symbol Name Of Corporation HET Major Holders Harrah's Entertainment Inc. (as of 30-JUN-2006) % of Shares Held by All Insider and 5% Owners: 7.00% Capital Research And Management Company 8.55% Janus Capital Management, LLC. 7.65% Goldman Sachs Group Inc. 7.31% Private Capital Management, Inc. 6.59% State Street Corporation 4.11% Hotchkis & Wiley Capital Management, LLC 3.17% Amvescap Plc 3.11% Barclays Global Investors UK Holdings Ltd 3.06% Vanguard Group, Inc. 2.47% Wellington Management Company, LLP 2.14% Total percentage of Barclays and "associates" 14.48%

Interesting! Barclays and associates control 14.48%, or 26,894,314 shares. So in today's Forbes article, $9.69 from $76.02 means it was $66.33 before the announcement. Therefore, yesterday, that block of stock was worth $1.8 billion. Today it's worth $2.04 billion, or exactly $260,605,902.66. Wow, $260 million in a day.

But the real point is this: if the private-equity funds are using leverage to buy existing businesses, according to Barton Biggs [see this Newsweek article] then they're probably putting up 20% of the $15.05 billion buyout price, or about $1.5 billion for each firm.

Now that means SOMEBODY is putting up the other $12 billion dollars. But who "controls" the investment banks and the money center banks, and what is used for collateral? Title to the acquired company? Then what of the news that these private-equity firms then borrow even more money to pay themselves dividends so they and their investors don't have to wait years for their return?

Perhaps these private-equity firms are being loaned so much money because the loan-originators are more interested in eventual ownership, without acquiring the debts. They'd be able blame the failure of the company to pay medical benefits, pensions and other promises on the private-equity firm.

I can't help but think that nothing has really changed since 1889, when the Great Red Dragon book was published, except that a greater amount of power has been concentrated into fewer hands since then.

The point is, control of American companies is rapidly being consolidated into a few foreign hands, and they are also doing so at "frantic" pace. Damn any of the promises that had been made, such as retirement benefits, health care and pensions. And why is this being done? To "own the earth in fee simple."

You can do the same lookup on any public corporation and see for yourself who controls what. You will also see that some of the major holders are hardly nothing more than a "front" for another, more powerful group. Simply find out who the major holders of the major holders are and you will see for yourself. This is simply to make it easier to deceive the public.

While doing this, remember that it only takes 10%, sometime less, sometimes more, of the stock to "control" a widely-held corporation. Especially when management and insiders show little or zero ownership. They, as hirelings, simply take their marching orders and their large paychecks, and everybody else be damned. If they show any conscience about what happens to their employees or customer base, they are simply replaced by another "aggressive leader." Be sure to click on the company's stock letters to check on these "Key Executives," the sums they were paid last year, and the stock options they cashed.

Another problem we're facing now is the growth of private-equity groups, which don't have to make the same disclosures as the publicly-held groups. This is why they keep fighting the SEC to "prevent" disclosure and accountability. I have no illusions that they too are simply "Snakes In Suits."

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© 2006 by Edward Ulysses Cate
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