State regulators clear Station Casinos reorganization

Station Casinos LLC's reorganization plan received approval Thursday from state gaming regulators, clearing the way for the company to emerge from bankruptcy.

The Nevada Gaming Commission voted unanimously in favor of the restructuring and licensing of local gaming company Station Casinos. Commissioners met after a 2½--hour state Gaming Control Board hearing, where the three-member board unanimously approved the application.

The commission needed about an hour to decide the company's fate. Commissioners voted 3-0 in favor of licensing, with Randolph Townsend unable to attend and Joe Brown abstaining because his law firm, Jones Vargas, had represented Station Casinos.

Commission Chairman Peter Bernhard told a standing-room-only crowd at the special meeting he was confident all regulatory requirements had been met. He expressed concern about the economic consequences if they failed to approve the reorganization plan.

The result, he said, would have been the "state's interest being harmed" by layoffs and closures of casinos. Bernhard also noted that the bankruptcy had benefited the Fertitta family, whose ownership stake with a $200 million investment had increased to 45 percent, up from 25 percent pre-bankruptcy.

Besides the Fertitta family's stake, Deutsche Bank AG will own 25 percent, JP Morgan 15 percent and former bondholders another 15 percent in the new, post-bankrupt Station Casinos.

At the control board hearing, members expressed confidence in the Fertitta family and expressed satisfaction with the intense scrutiny of the company by the U.S. Bankruptcy Court.

The Chapter 11 process began in July 2009, and will conclude next month. The company, which was approximately $6 billion in debt in 2009, will emerge from bankruptcy with $2.5 billion in debt.

Station Casinos will be led by Chairman Frank Fertitta III and his brother, Vice Chairman Lorenzo Fertitta, who also will be board members of the new company. Robert Cashell Jr. will represent Deutsche Bank on the board, while Steve Greathouse will represent JP Morgan. Regulators questioned Greathouse and Cashell at length about their compensation and the potential for conflict with regulators should a board member be removed. Each will be paid $75,000 annually as a member of the board.

The commission's approval meant it had licensed the reorganized company, which was approved -- with the exception of Green Valley Ranch Resort -- by U.S. Bankruptcy Court Judge Gregg Zive in Reno on Wednesday.

Zive is to hold another hearing on Green Valley Ranch on Tuesday, and the company's confirmation hearing is set for June 8.

The commission's licensing of Green Valley Ranch on Thursday anticipates the outstanding issues will be resolved in court. Greenspun Corp. is a partner in Green Valley Ranch and in Aliante Station but no representative of the Henderson-based family-owned company attended Thursday's hearings.

"We are close to emerging with a very healthy company and a bright future," Lorenzo Fertitta told regulators. Some 80 Station employees wearing "We Love Locals" nametags packed the hearing room at the Sawyer State Office building to support their company. The company, founded in 1976, employs 13,000 people.

Zive approved a plan that would have Station Casinos retain control of 17 properties, including Red Rock Resort, Palace Station and Boulder Station. The company will maintain its ownership stake of Green Valley Ranch, but only manage Aliante Station after it passes to a group of lenders, including TPG Capital and Apollo Global Management LLC.

Green Valley Ranch and Aliante have an additional $1 billion in debt. Two years before the company filed bankruptcy, the Fertittas and Colony Capital LLC, of Los Angeles, reached an $8.8 billion deal to take the Las Vegas-based company private.

Company officials said it was the economic collapse, not debt, that forced bankruptcy.

"None of us could have foreseen what happened in September 2008 -- the collapse of Lehman Brothers, the banks, housing and layoffs. (It) put a serious amount of stress and strain on our capital structure," Frank Fertitta III, president and CEO of Station Casinos, told the control board. "It was a magnitude we had never seen in our lifetime."

Fertitta told regulators he felt "good about the long-term viability of the company."

Thomas Friel, treasurer and chief accounting officer with Station Casinos, said the Fertittas' investment showed a continued commitment to the company, its employees and the Las Vegas community.

"It will be business as usual at Station Casinos from a business and management position," Friel assured regulators.

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893.