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Arnold M. Knightly

Station Casinos to file for bankruptcy

19 March 2009

LAS VEGAS, Nevada -- Station Casinos plans to file for bankruptcy by April 15, the gaming company said Monday in a federal court filing.

Station's filing came in response to a lawsuit filed by an individual bondholder challenging the gaming company's debt swap and prepackaged bankruptcy proposal.

Station spokeswoman Lori Nelson, however, said Wednesday that the court response does not indicate any change in the company's plans.

"Nothing has changed in our process," Nelson said. "We're continuing to negotiate with our bondholders. The prepackaged bankruptcy is just one scenario that could happen on or before that date."

She said Station executives envision three possible outcomes to the company's financial problems by April 15: It could file a prepackaged bankruptcy, either with or without bondholder approval, or it could seek a second extension from its debtors while it continues negotiating terms of a prepackaged bankruptcy.

Station Chief Development Officer Scott Nielson said if the company does file on that date, it will mean an agreement was reached with lenders.

"It will be a restructuring that will have no impact on our guests, on our team members and our vendors," Nielson said. "Obviously, we're continuing to negotiate with our lenders, and we're optimistic about getting something positive done there."

April 15 is the same day a forbearance agreement with holders of the company's $5.4 billion debt load expires. It also is five days after Station's new deadline for bondholders to approve the company's debt exchange offer.

The debt exchange proposal asks investors holding $2.3 billion in Station 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.

Some senior notes were valued as high as 31 cents on the dollar Wednesday, while subordinate notes were valued at 4 cents and 3 cents on the dollar, data from the Financial Industry Regulatory Authority show.

Station extended the voting deadline until April 10 after reaching agreements with its lenders to give the company more time to negotiate a restructuring plan after Boyd Gaming Corp. made an offer to buy much of the locals gaming company's assets for $950 million.

Rob Stillwell, Boyd's vice president of corporate communication, said Wednesday the company remains "interested in acquiring some or all the assets of Station Casinos."

Boyd has 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.

Station would join Herbst Gaming, scheduled to file its prepackaged bankruptcy Monday, and Tropicana Entertainment as locally based gaming companies who have filed for bankruptcy protection to restructure their heavy debt loads.

MGM Mirage and Harrah's Entertainment also have been mentioned as possible candidates for bankruptcy, as have smaller gaming companies Hooters Hotel, Riviera Holdings Corp., and Mesquite operator Black Gaming.

Investor S. Blake Murchison, who holds an unknown amount of Station's bonds, filed a lawsuit Feb. 12 against the proposed restructuring plan, claiming the gaming company "cherry-picked" who could take advantage of the bond offering.

Murchison claims the proposal would render individual bondholders' notes worthless since the proposal gives institutional holders priority over individual holders.

Station Casinos called Murchison's lawsuit "without merit" in a Feb. 17 filing with the Securities and Exchange Commission.

Station Casinos is negotiating with debt holders before the company files for bankruptcy, hoping to help the company restructure quickly and with less disruption.

Station first announced a prepackaged bankruptcy proposal Feb. 2. Under its proposal, the gaming company's owners -- the Fertitta family and real estate investment firm Colony Capital -- would put $244 million in cash into the company.

Station Casinos to file for bankruptcy is republished from