1. Looking at the Bank Loan Syndication Process
Capital Markets
Looking at the Bank Loan Syndication Process

2. Investment Grade Loan Market Leveraged Loan Market
Two Markets Served
Investment Grade Loan Market
Rated BBB- and Higher (Corporate)
Arrangers hold Higher Exposure ($200 million +)
The majority of the Syndicate are traditional banks
Leveraged Loan Market
Rated BB+ and Lower (Corporate)
Arrangers hold Lower Exposure
The majority of the Syndicate are non-banks (Financial institutions) 4

3. The Loan Syndication Process
Lead Arranger Bank
Administrative Agent
Issuer /Company
Bookrunner Bank #1
Syndication Agent
Bookrunner Bank #2
Documentation Agent
Bookrunner Bank #3
Documentation Agent
First Tier
Co-Mgr
Bank #1
Co-Mgr
Bank #2
Co-Mgr
Bank #3
Co-Mgr
Bank #4
Co-Mgr
Bank #5
Co-Mgr
Bank #6
Second Tier
Bank or Institution
Bank or Institution
Bank or Institution
Bank or Institution
Bank or Institution
“Retail” Level
Bank or Institution
Bank or Institution
Bank or Institution
Bank or Institution
Bank or Institution
Bank or Institution
Bank or Institution
Bank or Institution
Bank or Institution
Bank or Institution 13

4. The Loan Syndication Process (Continued)
The issuer or Company solicits bids from Arrangers.
Arrangers will outline their syndication strategy and their view on the way the loan will price in market.
Issuer gives the mandate to one or more Arrangers (Co-Arrangers)
The arranger will prepare an information memo (IM) describing the terms of the transactions.
The IM typically will include:
Executive Summary
Investment Considerations
Summary of Terms and Conditions (Term Sheet)
Transaction Overview
Company
Management and Equity Sponsor Overview
Industry Overview
Financial Model
Timing for commitments, closing, as well as fees on level of commitments
Bank meeting is scheduled at which potential lenders hear the management and the Investor group.
A deadline is given for the banks to send their commitment levels subject to final documentation
Each Bank analyzes the deal’s credit and assess the pricing (RORA). Each Issuer is assigned an internal rating.
The Arranger collects all commitments – different amounts from each Bank
Allocations are given and Legal Documentation is sent for their final review.
If the Deal is Oversubscribed, the allocation of each bank will most likely be reduced
If the Deal is Undersubscribed, depending on the FLEX language, the pricing could be Flexed up.
After Review of Legal Documentation by each lender and signatures are sent, the Deal closes and funds.
As part of the syndication process we will discuss in detailed these two items following this page. 14

5. The Loan Syndication Process (Continued)
Typical Internal Analysis Process by each bank
Internal Application sent to their respected investment/credit committees. This application includes the following:
Requested amount that is within the rating parameters for each bank
Recommended amounts by Tranche (Revolving Credit / Term Loans)
Term and Conditions of the Loans (includes pricing, structure and covenants)
Profitability (RORA and RAROC)
Syndication strategy
Transaction discussion including Source and Uses and Capital Structure
Company discussion including historical performance and outlook
Corporate Structure
Management Biographies / Equity Sponsor Profile
Collateral Analysis
Industry Analysis
Financial Analysis (Projections’ Model)
Internal Rating Analysis
Internal Legal Review
KYC (know-your-customer) and Compliance Review
This process will be discussed following this page 15

6. The Loan Syndication Process (Continued)
Typical Internal Rating Analysis by each bank
Most banks’ internal ratings are in line with the Agencies’ external ratings, though the analysis is done independently. This analysis is based on two approaches:
Quantitative Analysis
Qualitative Analysis
The Typical Scale is 1-10, 1 being with very limited risk to default and 10 the issuer being in bankruptcy with no chance of recovery
The Quantitative Analysis for establishing the Internal rating which measures the probability of default is based on the following parameters (each component is weighted at a specific level of importance):
Leverage Ratio - the relationship between debt and earnings (i.e. DEBT / EBITDA)
Capitalization Ratio – the relationship between the bank debt and the rest of the capital (Capital Leases, Bonds, Equity)
Coverage Ratio - Issuer’s Cash Flow covering it’s debt obligations (interest and principal payments)
Variance of Projections – based on the projections, the model typically assumes a certain haircut (10-30%) to the management’s projections and it tests it’s ability to pay its debt obligations.
The Quantitative approach adjusts up or down based on industry characteristics (Recession resistance, cyclical, or event driven).
The Qualitative Analysis is subjective based on each bank’s internal policy. The Analysis would include strength of management, support from the equity sponsor, recovery analysis (asset collateral) and outlook. 16

7. Typical Leverage Loan Structure (Rated by S&P as BB or lower)
Bank Debt Facilities (typically represented 30-35% of Total Capital):
Revolving Credit (Typically, Commercial Banks provide this facility)
Commitment Amount
Typical maturities of 5-6 years
Funded Versus Unfunded Amount
Funded Pricing and Unfunded Pricing (Commitment Fee)
Letters of Credit
Term Loans (typically, Non-Bank institutions provide this facility)
Funded Amount – sometimes structured as Delayed Draw Down
Typical Maturities of 6-8 years
Public Bonds / Notes (typically represented 20-25% of Total Capital):
Typical maturities of 9-11 years
Unsecured Debt
Private Equity (typically represented 30-45% of Total Capital): 17

8. Typical Leveraged Deal Term Sheet / Credit Agreement
1. Parties to the Credit Agreement:
Borrower
Holding Company
Guarantor / Parent and Subsidiaries’ Guarantee
Agent Banks
Administrative Agent
Collateral Agent
Syndication Agent
Documentation Agent
Law Firms representing the Borrower and Agent Banks
2. Description of the Transaction / Purpose of the Loan (s) 18

9. Typical Leveraged Deal Term Sheet / Credit Agreement (Continued)
Money Terms:
Amount / Tranches
Revolving Credit
Term Loans
Pricing
Interest Rate / Margin over LIBOR
Commitment Fees on unfunded portion
Maturities
Amortization Schedule (set principal payments)
Need 100% Vote from the syndicate banks to amend these terms 19

10. Typical Leveraged Deal Term Sheet / Credit Agreement (Continued)
4. Non-Money Terms:
Financial Covenants
Negative Covenants
Affirmative Covenants
Need Majority Vote (typical 51%) from the syndicate banks to amend these terms 20

11. Typical Leveraged Deal Term Sheet / Credit Agreement (Continued)
New Terminology in 2006 and 2007:
Covenant Lite Structures (“Covy lite”)
Incurrence Tests Vs Maintenance Tests
Typical Financial Covenants
Maximum Leverage Ratio (Total Debt / EBITDA)
Maximum Senior Leverage Ratio (Bank Debt / EBITDA
Minimum Coverage Ratio (EBITDA / Interest
Minimum Fixed Charge Ratio (EBITDA – Capex – Taxes ) / Interest + Principal Payments)
Maximum Capital Expenditures
Minimum Tangible Net Worth
New Terminology in 2006 and 2007:
“Green Shoe”
Typical Negative Covenants
Limitations on Additional Debt
Limitations on Asset Sales / Mergers & Acquisitions / Sale/leaseback transactions
Limitations of Dividends / Investments
Limitation on Liens / Negative Pledges
Excess Cash Sweep
Limitations of Change of Ownership 21

12. Typical Leveraged Deal Term Sheet / Credit Agreement (Continued)
Other Terms & Conditions:
Security / Liens / Guarantees
Mandatory Prepayments
Optional Prepayments / Call Protection
Financial Reporting / Maintaining Corporate Existence (“Affirmative Covenants”)
Representation and Warranties
Conditions Precedent at Closing
Events of Default
Assignments and Participations / Secondary Sales
Waivers and Amendments
Indemnification
Cross Default
Material Adverse Clause (MAC) 22

13. Typical Leveraged Deal Term Sheet / Credit Agreement (Continued)
Pricing, Fees and Expenses on Separate Documents:
Fee Letter
Interest Rate (Applicable Margin and Leveraged Grids)
Expenses 23

14. Typical Leveraged Deal Term Sheet / Credit Agreement (Continued)
Other Terminology to the Credit Agreement
LIBOR Floor
Original Issuer Discount (OID)
Margin Spread
A typical calculation of Loan Yields in the secondary market for loans:
LIBOR or LIBOR Floor + Margin Spread + (100-OID)/4* years = Loan Yield
*market convention is to use 4 years as it represents the average life
i.e. LIBOR Floor = 3.00%
Margin Spread = 400 basis points (or 4.00%)
OID = 96
Then the Loan Yield is calculated to:
3.0% + 4.0% + [(100 – 96)/100]/4 = 7.0% + (4.0% / 4) = 7.0% + 1.0% = 8.0% Yield 24

15. Typical Leveraged Deal Term Sheet / Credit Agreement (Continued)
Other Schedules Attached to the Credit Agreement
Intercreditor Agreement
Purchase Agreement
Hedging Arrangement / Hedging Agreement 25

16. Example of a Large Syndicated Loan
Harrah’s Entertainment 26

17. Example of a Large Syndicated Loan
Harrah’s Entertainment
TRANSACTION OVERVIEW
On December 19, 2006, Harrah’s Entertainment Inc. (“Harrah’s” or the “Company”) announced that it had entered into an agreement to be acquired by affiliates of Apollo Management (“Apollo”) and TPG Capital (“TPG”) in a transaction valued at approximately $31.2 billion (including estimated fees and expenses)
Harrah’s Entertainment, based in Las Vegas, Nevada, is the world’s largest and most geographically diversified gaming company, operating 50 casinos in six countries, with the #1 or #2 market share in almost every major gaming market in the U.S.
At the time of the acquisition, Harrah’s generated LTM 9/30/07 Net Revenues and Pro Forma Adjusted EBITDA of $10.6 billion and $2.9 billion, respectively.
Harrah’s Operating Company (“HOC”) owns or manages 43 of the 50 Harrah’s Entertainment casinos and generated LTM 9/30/07 Net Revenues and Pro Forma Adjusted EBITDA of $8.0 billion and $2.0 billion, respectively 27

18. Example of a Large Syndicated Loan
Harrah’s Entertainment
TRANSACTION SOURCES & USES 28

19. Example of a Large Syndicated Loan
Harrah’s Entertainment
STRUCTURE – TOO LEVERAGE??
Aggressive Structure?? 29

20. Example of a Large Syndicated Loan
Harrah’s Entertainment
CORPORATE STRUCTURE 30

21. Example of a Large Syndicated Loan
Harrah’s Entertainment
SUMMARY OF TERMS – SENIOR CREDIT FACILITY 31

22. Example of a Large Syndicated Loan
Harrah’s Entertainment
SYNDICATION PROCESS – WRONG TIMING FOR AN UNDERWRITTEN DEAL???
The general syndication of Harrah's was launched 1/15/2008 with a bank meeting in New York. Over 1,000 bankers attended the general syndication meeting with commitments requested by 1/29/2008.
Unfortunately, given the: i) global correction in the financial markets on the week of January 21, 2008, ii) dramatic widening of high yield credit spreads and iii) reduction in the 3-month Libor Rate by at least 120 bps that followed, the secondary market loan prices pulled back materially and bank investors started to demand a much higher All-In Yield (about L+ 500) on primary market transactions, like Harrah's.
Investors were demanding All-In Yield of between L to commit/purchase Harrah's Term Loan B. Since the offered TLB margin spread was L+300, investors were demanding a discount (OID) of between (compared to the original OID offer of 96.5) from the Underwriters/Arrangers.
Following the failed syndication, Arrangers in order to reduce their exposure, were offering Harrah's TLB with an OID in the low 90's. 33

23. Example of a Large Syndicated Loan
Harrah’s Entertainment
SYNDICATION PROCESS – WRONG TIMING FOR AN UNDEWRITTEN DEAL?? (continued)
At the time, given such low demand, it was reported that Credit Suisse started to quietly syndicate their exposure prior to the commitment deadline (1/29/2008), independent of the other Arrangers.
As a consequence, each of the Arrangers started to syndicate their own exposure to their own investors offering as low as 90's OID to syndicate their exposure.
After that incident, there was a new agreement made between the Arrangers called The Memorandum of Understanding (MOU) where it prohibits one arranger to sell their exposure within an agreeable period (6 months after the commitments are due) without the consent of the other Arrangers. 34