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Arnold M. Knightly

Union wants insiders to pull Station from bankruptcy

20 November 2009

LAS VEGAS, Nevada -- Culinary Local 226 is asking Station Casinos' creditors to demand the Fertitta family and other insiders that profited from the buyout make "significant equity investments" to help the company emerge from bankruptcy, according to a union-sponsored report released Thursday.

Station Casinos, however, called the report "silly" and "just more of the same corporate harassment by the Culinary union leadership that has been going on for years due to their frustration over not being able to persuade our employees to join the union."

The union, which is not involved in the bankruptcy, has tried unsuccessfully for years to organize some of Station's 18 properties, which employ nearly 13,000 workers.

The union said it is sending a letter to creditors in the case urging them to push for the company's insiders to return a substantial amount of money made from the buyout.

A union statement said Station Casinos "could have averted bankruptcy if not for the substantial debt it took on largely to enrich a small group of company insiders." The union said the amount was close to $1 billion of the $5.4 billion buyout price.

The study claims:

• The company's debt nearly tripled from $1.9 billion to $5.2 billion between 2005 and 2007, with more than two-thirds of the debt used to buy back shares and fund the management-led buyout.

• The company could have averted bankruptcy without the $2.6 billion in extra debt resulting from stock buybacks and the buyout, according to the report.

Station Casinos said the report fails to point out that the Fertitta family reinvested nearly $900 million in stock as part of the buyout.

The operator said the union should be more concerned with the struggles of their own members.

"You would think that in these difficult economic times, when thousands of union members have lost their jobs, that the Culinary union leadership would have something more productive to do with their members' dues than to create and distribute this silly report concerning a bankruptcy proceeding in which they have absolutely no involvement," the statement said.

The union's report comes a day before Station Casinos returns to bankruptcy court in Reno. Judge Gregg Zive is scheduled to hear arguments today 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.