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Arnold M. Knightly

Station Casinos buyout closes

8 November 2007

LAS VEGAS, Nevada -- Station Casinos ended its 14-year run as a publicly traded company Wednesday with the completion of a management-led buyout of the gaming company, the company announced Wednesday.

The close of the $5.4 billion deal means the gaming company's stock will no longer be listed on the New York Stock Exchange although the company will continue to file quarterly and year-end earnings reports with the Securities and Exchange Commission because some public debt financing is being used to finance the buyout.

"Technically, we're still a public company," Station President Lorenzo Fertitta said. "We just don't have publicly traded equity."

The company, which is now owned by Feritta Colony Partners, said the filings will be similar to current filings reporting all company revenues.

Fertitta Colony Partners is a partnership between the gaming company's founding family and Los Angeles-based real estate investment firm Colony Capital.

The company's final earnings report as a public company was scheduled for Wednesday but postponed until Friday because of the announcement.

Company executives also said Wednesday that, other than being delisted by the NYSE, the buyout should have little noticeable effect on the company.

"Tomorrow it's business as usual for our team members as well as the guests that come to see us every day," he said. "I really see no change at all."

The sale will affect shareholders, who approved the buyout deal in August.

Individual shareholders awaiting payment from the $90 per share buyout should soon receive a letter from Wells Fargo Bank with instructions on how to redeem their certificates.

Outstanding Station Casinos shares held by a brokers, financial institutions or other funds will be redeemed by those institutions in the next couple days, the company said.

With the buyout, the founding family increased its shares in the company from a 9.9 percent stake to nearly 25 percent.

"We really try to take a long-term view in the business," Lorenzo Fertitta said. "This gives us the opportunity to do that. One of the goals we've always had, from me and Frank's perspective, was wanting to own more of the company."

Los Angeles-based Colony Capital controls the remaining 75 percent.

Tom Barrack, founder, chairman and chief executive officer of Colony Capital, will hold a third seat on the board.

Frank Fertitta III will continue to direct the company as chairman and chief executive officer, positions he has held since the company went public in May 1993. Lorenzo Fertitta will remain vice chairman and president.

Sister Delise Sartini and brother-in-law Blake Sartini, chairman and chief executive officer of Golden Gaming, are also investors in the new company but will have no operational control.

Colony's approval will be needed before any major actions can be taken, such as large construction projects and acquisitions.

The new company is assuming $2.3 billion in debt and will pay off of a $1.1 billion revolving line of credit.

Lorenzo Fertitta told state gaming regulators in October that part of the gaming company's reason for going private was so the company could pursue acquisitions and development more aggressively and more efficiently than public companies can.

"Now as a private entity, Station has more flexibility to order its development pipeline in a way it couldn't as a scrutinized public company," a gaming analyst said on the condition of anonymity.

The analyst said the company could pursue opportunities outside the locals market that would have negatively affected its Wall Street value.

Station Casinos owns and operates nine hotel-casinos and is a joint-venture partner on another.

The gaming company, started in 1976 by Frank Fertitta Jr. as a 5,000-square-foot gambling hall where Palace Station now stands, also owns and operates three additional stand-alone casinos, co-owns two stand-alone casinos and manages an American Indian casino outside Sacramento, Calif.

The $675 million Aliante Station in North Las Vegas, another joint-venture, is under construction and scheduled to open in December 2008.

Station Casinos also has land holdings in Clark County and in Reno.

The Fertitta brothers journey for a bigger share and greater control began 16 months ago while the financing markets were on the upswing and shareholders suffered a downturn in the company's stock.

The discussion was sparked, in part, because of a sharp decline in the company's stock price after the April 2006 opening of Red Rock Resort.

Nearly two weeks before the resort's opening, the company's stock price hit a previous all-time high of $80.32 per share.

The stock, which traded near $79 per share through Red Rock's opening weekend in mid-April, began a gradual decline to $53.85 per share by July 26, a 33 percent decrease.

After finding a partner in Colony Capital, the partners offered $82 per share bid, eventually increasing the offer to the $90 per share price.

Colony Capital has a 60 percent stake in the Las Vegas Hilton through a fund held separately from Station Casinos.

Colony also has ownership interests in casinos in Mississippi, New Jersey and Indiana.

Station Casinos buyout closes is republished from