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Arnold M. Knightly

Creditors grant Station Casinos extention

15 April 2009

LAS VEGAS, Nevada -- Station Casinos has secured an extension until May 15 to continue negotiations on a prepackaged bankruptcy with its lenders and bondholders, the company announced late Tuesday.

The terms of the proposal, which asks investors holding $2.3 billion in bonds to accept between 10 cents and 50 cents on the dollar in cash and new notes as part of a prepackaged Chapter 11 bankruptcy, remain unchanged.

Under the plan, the company would enter a voluntary Chapter 11 bankruptcy and the gaming company's owners -- the Fertitta family and real estate investment firm Colony Capital -- would put $244 million in cash into the company.

Some senior notes were valued as high as 36 cents on the dollar Tuesday while subordinate notes were valued between 4 cents and less than 1 cent on the dollar, data from the Financial Industry Regulatory Authority show.

An earlier debt exchange, which offered between 20 cents and 54 cents on the dollar in new bonds and 3 cents on the dollar in cash for senior lenders, was rejected by bondholders in November. That proposal did not include any kind of cash infusion by the company's owners.

This is the second extension Station Casinos has sought since announcing its plan in early February.

The locals casino operator reached agreements in early March with its lenders to give the company more time to negotiate a restructuring plan after Boyd Gaming Corp. made an unsolicited offer to buy much of the gaming company's assets for $950 million. Station Casinos rejected that offer March 3, stating it is "in the best interest of the company and its stakeholders to proceed with the company's restructuring plan."

Lori Nelson, Station's director of corporate communications, said Tuesday that the two companies have not discussed Boyd's offer.

Boyd expressed interest in acquiring most of Station's assets, including Santa Fe Station, Texas Station, Wild Wild West, the two Fiesta properties and Station's 50 percent interest in Aliante Station and Green Valley Ranch Resort.

Station would retain Boulder Station, Sunset Station, Palace Station and Red Rock Resort under the Boyd proposal.

Rob Stillwell, Boyd's vice president of corporate communications, on Tuesday reaffirmed Boyd's interest in some of Station's assets. He declined, however, to comment on the extension.

Station Casinos has skipped five interest payments totaling $77.6 million since Feb. 1 in an attempt to save cash.

The company said Feb. 2 it had $350 million in cash to service and fund operations but has not updated that amount since.

The company posted a $3.3 billion loss last year, driven by a $3.34 billion noncash impairment write-down in the fourth quarter, according to the company's earnings report released March 31.

Net revenues fell to $1.3 billion last year from $1.45 billion in 2007, the lowest total since 2005, and cash flow for the year fell 14.4 percent to $475.5 million from $555.3 million in 2007.

Station Casinos is one of many gaming companies hit hard by the economic downturn.

Herbst Gaming and the Greek Isles have both entered Chapter 11 bankruptcy restructuring in the past month. Mesquite-based gaming operator Black Gaming, Hooters Hotel and Riviera Holdings Corp. are negotiating with their lenders after defaulting on loans.

Gaming giants MGM Mirage and Harrah's Entertainment are not yet in default, but many analysts believe both companies will have to restructure their large debt loads soon.