Palms, TPG announce partnership to ‘significantly reduce’ debt
14 June 2011
20 June 2011 3:10 p.m.
The Palms Casino Resort announced today it is partnering with TPG Opportunity Partners to “significantly reduce” debt at the property.
TPG Opportunity Partners is a partnership between Leonard Green & Partners and the Texas-based TPG Capital investment firm.
George Maloof, who runs the Palms on behalf of the Maloof family, said under the plan, the Palms is converting debt into equity, leaving the property debt-free.
Maloof said TPG Capital has been a debt holder for the past year and a half and said it brought in Leonard Green as a debt holder last year. Including the two investors and the Maloof family, Maloof said debt is estimated at $400 million.
Leonard Green and TPG said in a joint statement, “We are excited to partner with the Maloof family on this world-class asset and iconic brand.”
Maloof called the deal a “partnership,” but according to documents filed with the Nevada Gaming Control Board, the Maloofs will own 2 percent of the casino once the deal is complete, but said it could grow to 20 percent because of options granted in the contract. The family previously held a 85 percent share in the casino.
Maloof said the partnership better positions the resort for growth.
"It means a lot," Maloof said. "It’s good for our staff and puts us in a great position. We’ve been doing relatively well in the last six months in a tough market."
When asked for specific growth plans, Maloof said, “not right now, but we have lots of thoughts.”
The deal between TPG Capital and the Palms has been rumored for months but not confirmed until Tuesday. In January, Bloomberg reported that the firms had acquired most of a loan for the casino last year and sources close to the deal said the company might take an equity stake in the first quarter as part of the restructuring.
Maloof said the partnership won't change the family’s or his role at the property.
Station Casinos and an affiliate of the Greenspun family, owner of the Las Vegas Sun, are minority investors in the Palms.
“We are very pleased that George has worked out an arrangement that makes sense for he and his family. As to our participation, we are having ongoing conversations what our involvement, if any, will be,” said Bruce Deifik, president of the Greenspun Corporation.
As for Station Casinos role in the property going forward, spokeswoman Lori Nelson said, discussions are ongoing.
"We're pleased that George reached an arrangement with TPG," she said.
TPG Capital, along with Apollo Global Management, took Caesars Entertainment (then Harrah’s Entertainment) private for $30.7 billion in January 2008.
Leonard Green & Partners, a Los Angeles-based investment firm, tried to take control of M Resort with the Marnell family from lenders last year, but were outbid by Penn National Gaming. Penn National spent $230.5 million to acquire M Resort's $860 million in debt in October. The acquisition was approved by Nevada gaming officials earlier this month.
Join the Discussion:
- Swinger blocked from operating sex club gets another day in court
- Golden Gate owners hit rock bottom — for heating and cooling systems
- Skorkowsky appointed CCSD superintendent in unanimous vote
- On top of big salaries, companies like Wynn Resorts pile on perks for CEOs
- County elections chief to serve on presidential panel to streamline voting
- Surging home values in Las Vegas expected to keep their momentum
- Lake Las Vegas, long viewed as a bust, is rebounding
- What the Firefly outbreak means for the restaurant's future and the alleged victims' pocketbooks
- Cowabummer: The planned Memorial Day opening of Henderson's Cowabunga Bay Water Park is delayed
- Report: Las Vegas among top spots to ‘flip’ homes
Will online gaming hurt brick-and-mortar casinos?