Harrah’s, Caesars Sign to Sell Four Casinos

Harrah’s Entertainment,
Inc. and Caesars Entertainment, Inc. today signed a definitive agreement
to sell Harrah’s East Chicago, Harrah’s Tunica, Atlantic City Hilton and
Bally’s Tunica to an affiliate of Colony Capital, LLC.
The agreement calls for the Colony unit to pay a combined total of about
$1.24 billion for the four properties. The sale price represents
approximately 8.5 times the trailing 12-month Earnings Before Interest,
Taxes, Depreciation and Amortization (EBITDA) of the four properties.

Under terms of the agreement and subject to customary approvals, Colony
will purchase the assets of the four properties and assume certain related
current liabilities. One of the few private investment firms licensed in
gaming, Colony owns Resorts International in Atlantic City and the Las
Vegas Hilton. Colony also is a partner in Accor Casinos in Europe.

Harrah’s and Caesars agreed to sell the four properties in connection with
the $9.4 billion merger agreement they announced July 15, 2004, although
the sale is not conditioned on closing of the merger.

State regulatory agencies and the Federal Trade Commission are reviewing
the Harrah’s-Caesars merger, which the companies expect to be consummated
by mid-2005.

“We are very proud of the successful businesses built by the employees of
Harrah’s East Chicago and Harrah’s Tunica, and know their dedication and
professionalism will serve Colony well,” said Gary Loveman, Harrah’s
Entertainment president and chief executive officer.

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“Customers will continue to be able to earn credits with their Total
Rewards loyalty cards at these two Harrah’s properties until Colony
assumes control of them,” Loveman said.

Harrah’s expects to report no material after-tax gain or loss from the
sale. Harrah’s plans to use the approximately $476 million in after-tax
proceeds it expects to receive from the sale to reduce debt. The Tunica
and East Chicago properties will be reported as assets held for sale until
closing.

“This transaction will enable Caesars to accelerate our goal of reducing
our indebtedness below $4 billion and our debt ratio to less than 3.75
times EBITDA,” said Wallace R. Barr, Caesars Entertainment president and
chief executive officer.

After applying to debt reduction the anticipated $480 million in after-tax
proceeds of the sale of its two properties, Caesars’ indebtedness will
total approximately $3.7 billion, or approximately 3.6 times the company’s
trailing 12-month EBITDA as of June 30, 2004, excluding the result of the
two properties.

Caesars Entertainment expects to report a gain on sale in the quarter in
which the transaction closes. Until the sale is completed, the Atlantic
City Hilton and Bally’s Tunica will be accounted for as assets held for
sale.

“We are honored to be able to acquire these assets from two of the most
prestigious gaming companies in the world,” said Thomas J. Barrack,
chairman and CEO of Colony Capital. “Both Harrah’s and Caesars have
positioned and nurtured these properties for continued growth and
profitability. We look forward to meeting and working with the dedicated
employees at all four casinos.”

Various subsidiaries of Harrah’s Entertainment, Inc. own or manage 28
casinos in the United States, primarily under the Harrah’s brand name.
Founded 66 years ago, Harrah’s Entertainment is focused on building
loyalty and value with its valued customers through a unique combination
of great service, excellent products, unsurpassed distribution,
operational excellence and technology leadership.
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