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Station Casinos Will Sell Its Two Casinos in Missouri, Buy Another Competitor in Las Vegas Area

The company said it will sell the Missouri properties - Station Casino St. Charles and Station Casino Kansas City -- to a group led by John Finamore, president of Station's Midwest operations, and William W. Warner, the company's vice president of finance.

The purchase price for the Missouri assets is $475 million. No information was provided on how Finamore and Warner will finance the acquisition.

This apparently ends Station's once energetic efforts to do business in the riverboat gaming markets. Although it and Harrah's Entertainment are the largest operators in Missouri, Station has had lots of problems in that state.

It opened Casino St. Charles, in a suburb of St. Louis, in May 1994 and the Kansas City casino and hotel in January1997. In St. Charles, results were hurt by legal delays as well as flooding and, more recently, by competition from a larger Harrah's facility.

In Kansas City, early returns on Station's $300 million investment were disappointed. The property has performed better in recent months.

"The sale of the Missouri assets is consistent with our company's focus on expanding our presence in the Las Vegas market, where we have generated exceptional returns on invested capital," Frank Fertitta III, Station's chief executive, said in a statement.

"While the transaction will be dilutive to earnings initially, it reflects the Company's commitment to maintaining a strong balance sheet, which provides the flexibility to capitalize on the master planning and new development opportunities embedded in our Las Vegas franchise."

Station already dominates the off-Strip, locals market in Las Vegas, where it's based. Last month, it announced an agreement to purchase the Santa Fe Hotel & Casino in Las Vegas. Today, Station said it would buy the Fiesta hotel-casino in North Las Vegas for $185 million.

The all-cash deal includes a non-compete agreement with the Maloof family, which owns the Fiesta.

Station said it would keep the Fiesta name on the property, and use it as a brand for future sites "where a smaller footprint is required or advantageous." The Fiesta casino has 70,000 square feet.

Station owns the nearby Texas Station, as well as Boulder Station, Sunset Station and Palace Station. All are in Las Vegas or its suburbs. The company also owns Wild Wild West Gambling Hall & Hotel, a low-end facility near the Strip.

Station also announced today that Fertitta and Glenn Christenson, executive vice president, have recently received subpoenas to testify before a federal grand jury in the western district of Missouri. The grand jury is believed to be investigating a former St. Louis lawyer, Michael Lazaroff, who used to represent Station in Missouri.

Lazaroff recently pled guilty to three felonies, including not sharing bonus payments with his former law firm that were paid to him by Station.

Also today, Station reported results for the second quarter. The company earned $20.7 million on revenue of $244.3 million. That compares to earnings of $21.6 million on revenue of $235.4 million for the second quarter of 1999.

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