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Gaming Guru

Liz Benston

Lawsuit claims Station 'not acting gentlemanly'

16 February 2009

LAS VEGAS, Nevada -- Class-action lawsuits in response to big business deals are common.

Uncommon are lawsuits that begin with a quote from Russian novelist Leo Tolstoy.

A Station Casinos bondholder sued the company in federal court on behalf of similarly situated investors Thursday, saying some bondholders were left out of a plan to recapitalize the company.

"A gentleman is a man who will pay his gambling debts even when he knows he has been cheated," the complaint begins. Station Casinos' owners "are not acting gentlemanly," it continues.

Station Casinos, one of Las Vegas' largest victims in this recession, is expected to file for bankruptcy in March after bondholders vote on a proposed restructuring plan.

The plan proposes that bondholders exchange their bonds for notes worth less money. If a majority approve the offer, Station owners will put $244 million in new equity into the company, reducing the company's debt and keeping bank lenders at bay.

Station hopes bondholders will approve the so-called prepackaged bankruptcy plan, which would expedite the bankruptcy process and keep the Fertitta family, with partners Colony Capital, at the company's helm.

In his complaint, bondholder S. Blake Murchison says some bondholders are at risk of losing everything in a bankruptcy liquidation because they haven't been given the chance to exchange their bonds for new ones that would be ahead of existing notes in bankruptcy court. He owns two bonds.

The exchange offers are limited to "qualified institutional buyers" and "certain non-U.S. investors located outside the United States," the suit claims.

Station Casinos couldn't be immediately reached for comment.

Lawsuit claims Station 'not acting gentlemanly' is republished from