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Howard Stutz

Station Casinos announces plans for initial public offering

14 October 2015

Station Casinos, which has been privately held since 2008, announced plans Tuesday for an initial public offering that will return the company to the stock market.

The casino operator filed an S-1 registration statement with the Securities and Exchange Commission announcing plans to sell stock in the company. Station Casinos did not offer a time frame nor did it say which market — the New York Stock Exchange or the Nasdaq — where the company's stock will be listed.

"The number of shares to be offered and the price range for the proposed offering have not yet been determined," the company said in a statement.

Company officials declined comment beyond the brief statement.

In a separate filing with the SEC, Station Casinos said it promoted company president Steve Cavallaro to executive vice chairman; Rich Haskins, from executive vice president and general counsel to president; and Dan Roy from executive vice president of operations to executive vice president and chief operating officer. The management changes take effect on Nov. 1.

Station Casinos operates 19 large and small casinos throughout the Las Vegas Valley. The company also manages two Indian casinos, one in Northern California and one in Michigan.

The company was publicly traded before 2008, when private equity ownership took over Station Casinos. A year later, Station Casinos filed for Chapter 11 bankruptcy reorganization and emerged in June 2011 with a new ownership structure, having trimmed $4 billion of debt from the company's books.

Company founders Frank Fertitta III and Lorenzo Fertitta retained a 45% ownership stake in Station Casinos, due to a $200 million investment the brothers put into the company. But a year later, the Fertittas paid $73 million to buy out JP Morgan Chase & Co.'s ownership stake, giving the family a controlling 58% ownership.

In addition, the management of the company's casinos was held under Fertitta Entertainment. As part of the IPO, Station Casinos will acquire Fertitta Entertainment for $460 million.

Germany-based Deutsche Bank owns 25% of Station Casinos. The bankruptcy reorganization gave the bank an option to place Station Casinos into an IPO in June 2016, the five-year anniversary of the restructuring.

Rumors of a pending IPO surfaced in February during the company's fourth-quarter earning conference call.

In May, Nevada gaming regulators approved an amendment to the company's gaming license that allows payment of financial distributions to the company's owners without approval from the Gaming Control Board. The condition was a holdover from its private equity ownership days. At the time, Station Casinos Chief Financial Officer Marc Falcone said the ruling had nothing do with a potential IPO.

Falcone also said in May company's balance sheet has improved since emerging from bankruptcy with cash flow growing 48%. Station Casinos' net revenue grew 4% in the second quarter while cash flow increased for the 17th straight three-month period.

Because of the company's $2.1 billion in long-term debt, Station Casinos reports quarterly earnings.

The move to return to the public markets comes as Wall Street is giving a clean bill of health to the Las Vegas locals gaming market. The locals sector is up 3.1% through September, according to the Gaming Control Board.

Morgan Stanley gaming analyst Thomas Allen said in a report last week the competitive environment among the locals market was "rational, with no meaningful changes in promotional spending."

Properties, including those operated by Station Casinos, are expanding their nongaming amenities.

The company undertook a $55 million capital improvement effort at its flagship Red Rock Resort and Green Valley Ranch Resort to upgrade various nongaming aspects of the properties such as new restaurants and hotel rooms.
Station Casinos announces plans for initial public offering is republished from