Let the casino bidding begin


A bankruptcy court judge Monday rejected a request to delay an auction of Station Casinos’ properties, calling the unsecured creditors’ motion premature.

“Going through the sale process could eliminate a lot of speculation,” Bankruptcy Judge Gregg Zive said during a court hearing in Reno. “Nobody sitting here can tell me what will happen as a result of this auction.”

Zive noted that the auction, which is scheduled for Aug. 6, could reveal additional parties interested in some of the bankrupt company’s properties, possibly increasing what could be recovered for creditors in the auction.

The Official Committee of Unsecured Creditors wanted to delay the auction of 11 Station Casinos properties while they asked a federal court to review the auction procedures set by Zive. The committee argues that the auction procedures will hurt their chances of recovering much of the $2.5 billion in debt they hold.

The auction also includes land holdings and American Indian gaming contracts held by Station Casinos.

Brett Axelrod, attorney for the unsecured creditors, said the committee is concerned that the current rules will keep other parties from bidding.

Zive, however, said he found that scenario unlikely.

Boyd Gaming Corp. and Penn National Gaming, it was noted during the hearing, have already expressed an interest in possibly bidding on some or all of the gaming company’s properties.

The auction procedures approved by Zive established a stalking horse bid of $772 million by a group led by Fertitta Gaming. Fertitta Gaming is owned by Station Casinos founders Frank Fertitta III and Lorenzo Fertitta. That bid provides an 87 percent recovery rate for the company’s secured lenders, court documents show.

The bid is supported by primary lenders Deutsche Bank and JP Morgan Chase & Co., and gaming company co-owner and real estate investor Colony Capital.

The creditors committee complained that the auction favors Station Casinos and the secured creditors and excludes some of the company’s most valuable assets.

Five casinos — Red Rock Resort, Sunset Station, Palace Station, Boulder Station and the Wild Wild West and adjoining 110 acres — won’t be auctioned and will be foreclosed on by lenders controlling $2.475 billion, led by Deutsche Bank and JPMorgan.

The bankruptcy plan proposed by Station Casinos calls for those hotel-casinos to be managed and co-owned by Fertitta Gaming.

The committee complained that the exclusion of the five casinos will hurt the valuation of the remaining assets. The five casinos’ current market value was not explored before the procedures being put into place, the committee’s court filings said.

On Monday, an attorney for Deutsche Bank argued that delaying the auction would hurt the company’s value by increasing legal fees. He said a delay could also jeopardize the current stalking horse bid.

Properties being auctioned include Santa Fe Station, Texas Station, both Fiesta properties and the Wildfire casinos.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.

 

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