Bankruptcy judge approves Station Casinos reorganization plan

A federal bankruptcy judge in Reno confirmed Station Casinos’ plan of reorganization Friday after 90 percent of the company’s secured and unsecured creditors signed off on the deal, which will wipe some $4 billion in debt from the company’s books.

The plan will give creditors an ownership stake in the reconfigured operation, with the Fertitta family remaining in control of the company.

The hearing in front of U.S. Bankruptcy Judge Gregg Zive took a little more than an hour.

In remarks from the bench, Zive said his goal at the outset of the process was to ensure that a “fair and equitable” plan of reorganization was approved. He was happy that all 17 classes of the company’s creditors eventually signed off on the deal.

Zive called the reorganization plan complicated, but he said it will allow the company to service its remaining debt.

Station Casinos filed for Chapter 11 bankruptcy reorganization in July 2009, owing some $6 billion. The company is expected to emerge from bankruptcy in early 2011 with a more manageable debt of $2 billion.

Before the bankruptcy filing, the company’s creditors rejected an offer that would have allowed the Fertitta family and real estate investor Colony Capital to retain control.

According to Bloomberg News, at least $1.7 billion of Station’s debt was the result of a leveraged buyout in November 2007 by Fertitta Colony Partners, which took the casino operator private.

Nevada gaming regulators and the National Indian Gaming Commission will have to confirm the new corporate ownership structure.

Under the reorganization plan, a new holding company was established, owned by Colony Capital, secured lenders Deutsche Bank and JP Morgan, and Fertitta Gaming, which was formed by Station Casinos founders Frank Fertitta III and his brother, Lorenzo.

The new company takes over Red Rock Resort, Palace Station, Sunset Station, Boulder Station and the Wild Wild West and its adjoining 110 acres. Those casinos provide more than half of Station Casinos’ overall revenues.

The Fertittas will put up $85 million for their share of this company.

Fertitta Gaming also won a bankruptcy-supervised auction to acquire 11 casinos, land holdings and American Indian gaming contracts for $772 million. Fertitta Gaming was the only qualified bidder and companies, including Boyd Gaming Corp., declined to bid after Station Casinos announced a settlement with bondholders. Boyd said the court-supervised bidding process was tilted in favor of the Fertittas and the secured creditors.

Fertitta Gaming will operate both sides of the reorganized company and the Station Casinos name will remain.

Still to be determined is the future of Green Valley Ranch Resort and Aliante Station, which were not part of the bankruptcy. Station Casinos operates the casinos in a 50-50 joint venture with the Greenspun family and the owners are working to restructure debt.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.

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