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Arnold M. Knightly

Station Casinos posts $455.4 million loss

17 November 2009

LAS VEGAS, Nevada -- Bankrupt Station Casinos' financial losses continue to mount.

The local gaming company posted a $455.4 million loss in the third quarter, a filing Monday with the Securities and Exchange Commission showed.

The company said its huge third-quarter net loss was tied to a debt write-off and other charges related to its bankruptcy filing.

The loss for the quarter ended Sept. 30 was an increase from the $23.4 million loss posted at the same time last year.

Nearly $370.7 million of the loss was due to costs tied to the company's reorganization efforts, including a $225 million debt write-off and $17.9 million in professional fees related to the bankruptcy.

The company's net loss for the first nine months of the year is $544.4 million, compared with a $75.7 million loss in the first nine months of 2008.

Station Casinos declined further comment Monday.

Station Casinos' five joint venture operations with the Greenspun Corp. also continued to suffer during the quarter, according to the filing.

The joint venture's newest property, Aliante Station in North Las Vegas, lost $3.7 million in the quarter, driving the joint venture's earnings to a net operating loss of $3.6 million in the quarter. That's a sharp swing from the $2.3 million profit in last year's third quarter.

The troubled $662 million Aliante Station, which opened Nov. 11, 2008, had a nine-month earnings loss of $9.7 million.

The earnings release comes days before another bankruptcy hearing in Reno. Judge Gregg Zive Is scheduled to hear arguments Friday on various motions, including Boyd Gaming Corp.'s request that a third-party examiner be appointed to review Station Casinos' financial records.

Boyd's request is in response to a motion by Station Casinos seeking additional time to file its own reorganization plan. Station Casinos is seeking a four-month extension from the Nov. 25 deadline to file a proposal.

Station Casinos filed for Chapter 11 bankruptcy in July after failing to reach agreement with its creditors on a plan to restructure its long-term debt, which is now $5.9 billion.

A group of small lenders representing nearly 5 percent of the debt has asked Zive to appoint an examiner to look into several aspects of the bankruptcy, including Station Casinos' November 2007 buyout, which loaded the company with debt.

The lenders also believe Station Casinos' board may have had conflicts of interest when it rejected Boyd's offer to buy some of its competitor's operating assets for $950 million.

Other earnings information from the filing showed the gaming company's quarterly revenues dropped 19.3 percent last year, to $255.7 million from $317 million. Nine-month revenues were down 20.1 percent to $805.6 million from $1.01 billion last year.

Adjusted cash flow dropped 43.5 percent to $61.4 million in the quarter, and dropped 36.1 percent to $238.6 million for the first nine months of the year.

Hotel occupancy dropped 6 percent to 84 percent in the quarter and 5 percent to 85 percent for the year.

Average daily room rates dropped to $61 from $77 in the quarter.

Station Casinos owns 13 properties, including Red Rock Resort, Palace Station, Boulder Station, Texas Station, Sunset Station, Santa Fe Station, the Fiestas and Wildfire casinos. It also manages an American Indian casino in California.

In addition to Aliante Station, the Station Casinos-Greenspun Corp. joint venture owns Green Valley Resort and three smaller casinos.

Green Valley Resort had an operating loss of $855,000 in the first nine months of the year, a swing from the $17.5 million net earnings realized for the same period last year. Its revenues declined 27.8 percent in the quarter to $42.6 million. Property cash flow fell 56.4 percent to $8.5 million.