Gary Loveman and the probabilities
From a Businessweek profile of Harrah's CEO Gary Loveman:What Loveman was doing, with a huge assist from Marc Rowan, managing partner of Apollo, and David Bonderman, a founding partner of TPG ("the F-16 pilots of debt refinancing," as Loveman calls them), was making holders of Harrah's debt an offer they couldn't refuse: Trade your old debt for new debt, and take a haircut in the process. The alternative? Loveman didn't need to spell it out: Watch your investment shrink to nothing as Harrah's is crushed by its own debt. You could pay a little now-a few billion-or pay a lot more later. "It was poker," Loveman says. "It was game theory, something I'm very comfortable with. It was a matter of recognizing and anticipating the decision of the other actor when confronted with the information that would become available to them. Here is the choice set that is available to you, so what are you going to do?"