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Arnold M. Knightly

Station Casinos misses another debt payment

18 February 2009

LAS VEGAS, Nevada -- Station Casinos skipped a $15.5 million debt payment Tuesday, the second payment the company has missed this month.

The local casino company made the announcement in a morning filing with the Securities and Exchange Commission.

Station Casinos skipped a $14.6 million debt payment due Feb. 1 on a separate loan. Instead, it presented a prepackaged bankruptcy filing on Feb. 3 that, if approved by bondholders, could have the company file for Chapter 11 bankruptcy in March and emerge by the summer.

Station Casinos has 30-day grace periods to make both payments, until March 3 and March 17, to avert a default.

The company, which has $5.4 billion in long-term debt, is hoping to entice bondholders of $2.3 billion in notes into a debt exchange as part of the proposed bankruptcy.

Station said in the Feb. 3 statement it has $350 million in cash to continue paying expenses and fund operations.

In the same filing, Station Casinos said a lawsuit filed last week by an individual bondholder challenging the bankruptcy plan was "without merit."

S. Blake Murchison's lawsuit, filed Feb. 12 in Nevada federal court, claims Station Casinos is favoring institutional investors over individual bondholders by "trying to avoid honoring the debt obligations they owe a large portion of their bondholders."

Murchison, who is seeking class-action status, claims the defendants, officers of the casino company as well as co-owner Colony Capital, "are not acting gentlemanly" in offering him a bond holding that "will likely be rendered worthless as the specter of Station Casinos' insolvency approaches."

Station Casinos disputes the charge in the filing, claiming "all holders of the company's outstanding senior notes and senior subordinated notes, respectively, would receive the same consideration" under the bankruptcy plan "regardless of whether such holders were eligible to participate in the solicitation of votes for the plan."

Station Casinos misses another debt payment is republished from