David Hargreaves of Sterne Agee reports that Harrah's Operating Company may breach its leverage covenant due to excessive leverage and a tough economy. The report suggests management may resort to drastic cost-cutting measures, potentially straining customer and employee relationships. Hargreaves cites a decline in fair share and questions high customer satisfaction scores. He also discounts reports of improved business volumes in Las Vegas, suggesting they are due to excessive promotions. Hargreaves estimates HOC interest coverage at 1.1 to 1.2 times based on a $1.3 billion EBITDA estimate.
documents/EFTA00605017.pdf
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