Silver State Capital group hunts for big gaming

Silver State Capital Advisors executives say they're looking for deals, not a fight, in Station Casinos' bankruptcy case.

The management group is talking to private equity firms and other potential investors about acquiring some of the locals gaming company's properties.

"We want to get in there and see what we can do," Silver State managing director Jay Fennel said. "We're serious."

Silver State, however, does not want to be viewed as anyone's adversary during the bankruptcy proceedings.

"We are not hostile to Stations," said Sean Manchanda, a financial adviser who is part of the investment group formed by Club Fortune owner Carl Giudici. "We don't feel that way. We're quite happy to meet with Station and take these seven properties off their hands for fair market value. We're also happy to work with Penn National (Gaming), who we believe has an interest in this market, or Boyd Gaming, or anybody else we might be unaware of."

Silver State said in early May it would like to acquire some of Station Casinos' smaller properties. The properties are Barley's Casino & Brewing Co., Gold Rush Casino, Lake Mead Casino, The Greens Gaming & Dining, Wildfire Casino-Boulder, Wildfire Casino-Lanes and Wildfire Casino-Rancho.

Silver State has tried to make a big gaming acquisition before. It and an unidentified private equity group bid $504 million for Herbst Gaming before lenders decided to take over that company, Fennel said.

"We've been active in other transactions and are very stealthy," said Fennel, a former Station Casinos executive and Club Fortune's current chief operating officer. "A lot of people haven't been aware of us, we've been in the shadows, waiting for the right time to come out and do our thing.

"We're small but powerful and can move quickly," Fennel added. "We're getting the respect of Wall Street as operators."

Giudici, who has been involved in Nevada gaming for nearly 25 years, formed Silver State to look for investment and management opportunities in the financially depressed casino industry.

Besides Giudici, the group includes two executives from the Henderson casino Club Fortune and Manchanda, who has 11 years experience in the gaming industry.

Fennel said Thursday that Silver State is talking with three or four private equity firms about joining its bid for some of bankrupt Station's assets.

As part of its proposed reorganization, Station Casinos wants to place 11 casinos, certain land holdings and American Indian gaming contracts up for sale in a bankruptcy auction as one entity.

Fertitta Gaming -- a management entity formed by Station Casinos' Frank Fertitta III and Lorenzo Fertitta, real estate investor Colony Capital, and primary lenders Deutsche Bank and JP Morgan -- plans to bid for the properties as the starting bid or "stalking horse" bid with an offer of $772 million. The auction is Aug. 6 in Reno.

The bankruptcy judge said potential bidders could make offers on individual casinos or part of Station's assets.

Manchanda said his group could also partner with another party to bid for some of assets or even wait until after the bankruptcy is completed to try to buy some of the properties.

Silver State is the second group to announce interest in acquiring Station assets.

Boyd Gaming Corp. has made several well-publicized overtures about acquiring its largest competitor's assets through bankruptcy.

Silver State is interested in more than Station Casinos' assets. It has been considering other opportunities in and outside Nevada.

Silver State's background as a casino operator may give the group an advantage when talking with potential partners. Managing director Tim Steinke said having individuals in his group already licensed by Nevada gaming regulators makes Silver State attractive to investors who might want to move on a deal quickly.

"Those guys aren't licensed so that's one more reason why they need a group like us," said Steinke, who is also general manager and chief financial officer of Club Fortune.

Giudici added, "We're not in the glass tower, we're on the floor. We're kicking the machines. We're street-savvy guys that get it, that understand the process."

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