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Tribal project overseen by Station Casinos secures financing16 August 2012
"We believe this is the largest amount of financing ever in the history" of Native America gaming, Mark Falcone, executive vice president and chief financial officer at Station Casinos, said Wednesday in a conference call with gaming industry analysts. The Federated Indians of Graton Rancheria broke ground June 18 for the 535,000-square-foot Graton Resort & Casino adjacent to Rohnert Park, some 43 miles from San Francisco. Station Casinos was selected in April 2003 to partner with the tribe. Falcone said Station expects to receive $194 million from the financing as partial repayment for advances it has made to the tribe over nine years. Of that amount, he said, $150 million will be used to reduce Station Casinos' $2.3 billion debt. Since the Las Vegas-based gaming company's exit from bankruptcy in June 2011, it has paid off more than $130 million in debt. Station Casinos is still owed $56 million by the tribe. The company will also earn management fees ranging from 24 percent to 27 percent of the casino's pretax income over the seven-year management agreement that starts when the project opens. Opponents of the casino, including The Stop 101 Coalition, have filed a lawsuit challenging the sovereign status of the tribe's reservation. On May 7, 2008, the U.S. Department of Interior placed in trust 254 acres, creating a reservation for the Graton tribe just west of Rohnert Park. The tribe, with Station Casinos' assistance, finalized project financing Tuesday at a "blended cost" of 9.6 percent. The financing is set to close on Aug. 22, and Falcone expects the casino to open in late 2013. The financing consists of a $25 million revolving credit agreement, a $375 million term loan and $450 million of senior notes, the company said. Standard & Poor's gave a "B" rating, and Moody's Investors Service assigned a "B3" rating to the tribe's finance company, the Graton Economic Development Authority. The B ratings are a lower rating and considered to have a higher risk. But it's a common rating assigned to the casino industry. When completed, the tribe will have a 100,000-square-foot resort, with as many as 3,000 slot machines and 2,500 employees. Station Casinos hosted a conference call a day after filing its quarterly financial report with the Securities and Exchange Commission. On Tuesday, the local gaming company said it earned $7.5 million in the second-quarter on net revenue of $312.2 million. Falcone attributed the strong financial results to the company's successful efforts in strengthening its brand and image through its marketing efforts. He said the company will release its Sports Connection mobile sports wagering app by Oct. 31. Falcone said customers will be able to wager on sports anywhere in Nevada, as Station Casinos joins Cantor Gaming and William Hill in releasing mobile betting apps. He told analysts Station Casinos' tribal business "will allow us further de-leveraging of our balance sheet." Station Casinos in December 2003 entered into a similar development and management agreement with the North Fork Rancheria of Mono Indians, a federally recognized tribe near Fresno, Calif. The company, which is still waiting for regulatory approvals, purchased a 305-acre parcel near Madera, Calif., for its project. Station Casinos also owns 50 percent of MPM, which manages the Gun Lake Casino in Michigan on behalf of the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians. Despite several tribal gaming projects, Falcone said the company's focus will remain on its core market, Las Vegas. Station Casinos operates 17 properties in Southern Nevada . "We will continue to evaluate other opportunities that our presented to us," Falcone said. Copyright GamingWire. All rights reserved.
Tribal project overseen by Station Casinos secures financing
is republished from Online.CasinoCity.com.
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