Company emphasizes need to restructure debt; casino operations unaffected

Station Casinos on Tuesday filed for Chapter 11 protection after reaching an impasse in months-long negotiations with creditors on a plan to restructure the gaming company’s $5.7 billion debt load.

“We have been working with the various creditor groups for months and it has been very difficult to get all of the creditors to come to a consensual agreement among themselves and with the company,” Chief Accounting Officer Thomas Friel said.

The bankruptcy case, which includes parent company Station Casinos Inc. and 17 of its noncasino affiliates, was filed Tuesday afternoon in U.S. Bankruptcy Court in Reno. The noncasino subsidiaries control the company’s landholdings in Reno and other nongaming assets.

The company’s 18 casino properties and their affiliates were not included in the bankruptcy filing, and Friel stressed that the company’s properties will “continue to operate exactly like they do today” while in bankruptcy.

Chief Operating Officer Kevin Kelley added that the bankruptcy will not affect employees or vendors getting paid or the company’s reward point system.

“It is business as usual at our 18 operating properties,” Kelley said. “Team members, guests and vendors are going to be treated just as they always have been for the last 33 years.”

Station Casinos’ filing listed $5.7 billion in assets against $6.5 billion in debt. The filing said the company has 510 holders of unsecured and subordinate debt totaling $4.4 billion.

Most of the debt helped finance the company’s management-led buyout nearly 21 months ago, and raised the Fertitta family’s ownership stake from 9.9 percent to 25.1 percent.

The remainder of the company is controlled by Los Angeles-based real estate firm Colony Capital.

Colony Capital declined a request for an interview, instead issuing a statement: “The decision was not taken lightly and we and our advisers believe this move represents the best alternative to protect the company and allow pursuit of our goal to maximize value to the benefit of all stakeholders.”

Tuesday’s bankruptcy filing is not the prepackaged bankruptcy plan the company announced in February and has been trying to get bondholders to accept since then.

Even before then, in October 2008, the company started discussing a possible restructuring of its debts with creditors, according to the filing.

The prepackaged bankruptcy plan, which would have allowed the company to eliminate about half of its debt, asked investors holding $2.3 billion in unsecured bonds to swap high-cost debt for low-cost debt and cash. Station Casinos’ offer would have given the bondholders between 10 cents and 50 cents on the dollar in new secured notes and cash.

Since first proposing the restructuring plan, Station Casinos has entered into a series of forebearance agreements while it continued trying to negotiate a prepackaged bankruptcy agreement with the bondholders. The latest one expired on July 17 and Station Casinos did not get a formal extension from the bondholders.

Without an agreement with bondholders, Station Casinos decided a bankruptcy filing was the best way to get the company’s financial problems straightened out.

Station Casinos, like other local gaming companies, has been struggling to make payments on the heavy debt loads it racked up over the past several years as casino companies were rapidly expanding with easily available credit.

The recession, however, sent visitor volumes and spending plummeting in Las Vegas, hurting casino companies’ bottom lines.

“The restructuring of our debt will provide us with the financial flexibility necessary to meet the challenges of the current economic environment,” Chairman and CEO Frank J. Fertitta III said in a statement.

The gaming company said its secured lenders had also agreed to let Station Casinos borrow up to $150 million in cash from one of the company’s noncasino assets. The money would be used to pay normal operating expenses while the company is in bankruptcy. The bankruptcy judge would need to approve that loan, though.

Bill Lerner, a principal analyst with Union Gaming Group, said Tuesday’s filing leaves unclear what Station Casinos is offering creditors in its bankruptcy proposal.

“The operating assets of the casino are not included in the bankruptcy so that begs the question: What do the creditors get,” Lerner said. “For some reason, that’s not disclosed or not clear. It could be some cash consideration, or to-be-determined. But more likely, it would be equity, or an ownership stake in Station Casinos as it exits bankruptcy.”

In November 2007, Station Casinos was taken private in a $5.4 billion buyout by the Fertitta family, the company’s founders, and real estate investment firm Colony Capital.

Station Casinos, the dominant locals casino company in Las Vegas, owns and operates Red Rock Resort, Palace Station, Sunset Station, Boulder Station, Texas Station, Santa Fe Station, Wild Wild West, the two Fiesta properties, the Wildfire properties and vast land holdings in Clark County and Reno.

The company also has a 50 percent interest in Green Valley Ranch and Aliante Station, which are owned outside the company.

 

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

 

ad-high_impact_4
Business
Bellagio, MGM Resorts International’s luxury hotel turns 20
The more than 3,000-room Bellagio hotel is situated on the site of the former Dunes Hotel. The Dunes was imploded in 1993, and construction of the Bellagio started in 1996. It cost $1.6 billion to build, making it the most expensive hotel in the world at the time. The Bellagio was former Wynn Resorts Ltd. Chairman and CEO Steve Wynn’s second major casino on the Strip after The Mirage. MGM Resorts International acquired the property from Steve Wynn in 2000. (Tara Mack/Las Vegas Review-Journal)
Facial recognition software at G2E – Todd Prince
Shing Tao, CEO of Las Vegas-based Remark Holdings, talks about his facial recognition product. (Todd Prince/Las Vegas Review-Journal)
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Bobby Baldwin to leave MGM
MGM Resorts International executive and professional poker player Bobby Baldwin is set to leave MGM.
Caesars has new armed emergency response teams
Caesars Entertainment Corp. has created armed emergency response teams. They are composed of former military and law enforcement officials. "These teams provide valuable additional security capabilities,” Caesars spokeswoman Jennifer Forkish said. Caesars is hiring Security Saturation Team supervisors, managers and officers, according to LinkedIn. The company did not say how many people it plans to hire for the units. (Las Vegas Review-Journal)
Las Vegas, airlines prepare for CES
CES in January is expected to attract more than 180,000 attendees. (Las Vegas Review-Journal)
AGS partners with Vegas Golden Knights
AGS is the nation’s second-largest manufacturer of Class II slot machines used primarily in tribal jurisdictions. It announced a marketing partnership with the Vegas Golden Knights NHL team. (Las Vegas Review-Journal)
Lehman Brothers bet big on Las Vegas
Lehman Brothers collapsed 10 years ago, helping send the country into the Great Recession.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Ross & Snow launches in Las Vegas
Luxury shoe brand Ross & Snow has opened in Las Vegas, featuring "functional luxury" with premium shearling footwear. (Bailey Schulz/Las Vegas Review-Journal)
Remote Identification and Drones
DJI vice president of policy and public affairs discusses using remote identification on drones. (Bailey Schulz/Las Vegas Review-Journal)
Drones and public safety in Nevada
Two representatives in the drone industry discuss UAV's impact on public safety. (Bailey Schulz/Las Vegas Review-Journal)
Frontier Airlines to launch flights from Las Vegas to Mexico
Frontier, a Denver-based ultra-low-cost carrier, will become the first airline in more than a decade to offer international service to Canada and Mexico from Las Vegas when flights to Cancun and Los Cabos begin Dec. 15. (Rick Velotta/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International opens the doors on MGM Springfield
Massachusetts’ first hotel-casino opens in downtown Springfield. The $960 million MGM Springfield has 252 rooms and 125,000-square-feet of casino. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International prepares to open MGM Springfield
Las Vegas-based MGM Resorts International gave news media and invited guests a preview of the $960 million MGM Springfield casino in Massachusetts. The commonwealth's first resort casino will open Friday, Aug. 24. (K.M. Cannon/Las Vegas Review-Journal)
A Walk Through Circus Circus
It only takes a short walk through Circus Circus to realize it attracts a demographic like no other casino on the Strip: families with young children. (Todd Prince/Las Vegas Review-Journal)
Morphy Auctions, a vintage slot machines seller, wants gaming license
Vice president Don Grimmer talks about Morphy Auctions at the company's warehouse located at 4520 Arville Street in Las Vegas on Thursday, Aug. 16, 2018. (Rick Velotta/Las Vegas Review-Journal)
Nevada's venture capital money doesn't stay in state
Zach Miles, associate vice president for economic development for UNLV, said there’s venture money in Southern Nevada, “but trying to find the right groups to tap into for that money is different.” According to a 2017 report from the Kauffman Foundation, Las Vegas ranked number 34 out of 40 metropolitan areas for growth entrepreneurship, a metric of how much startups grow. With a lack of growing startups in Las Vegas, investment money is being sent outside of state borders. The southwest region of the U.S. received $386 million in funding in the second quarter, with about $25.2 million in Nevada. The San Francisco area alone received about $5.6 billion. (source: CB Insights)
Neon wraps can light up the night for advertising
Vinyl wrap company 5150 Wraps talks about neon wraps, a new technology that the company believes can boost advertising at night. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nevada on the forefront of drone safety
Dr. Chris Walach, senior director of Nevada Institute for Autonomous Systems, talks to a reporter at NIAS's new Nevada Drone Center for Excellence of Public Safety, located inside the Switch Innevation Center in Las Vegas. K.M. Cannon Las Vegas Review-Journal @KMCannonPhoto
Motel 8 on south Strip will become site of hotel-casino
Israeli hoteliers Asher Gabay and Benny Zerah bought Motel 8 on the south Strip for $7.4 million, records show. They plan to bulldoze the property and build a hotel-casino. Motel 8 was built in the 1960s and used to be one of several roadside inns on what's now the south Strip. But it looks out of place today, dwarfed by the towering Mandalay Bay right across the street.
Project billed as one of the world's largest marijuana dispensaries plans to open Nov. 1
Planet 13 co-CEO Larry Scheffler talks about what to expect from the new marijuana dispensary, Thursday, July 19, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Oasis Biotech opens in Las Vegas
Brock Leach, chief operating officer of Oasis Biotech, discusses the new plant factory at its grand opening on July 18. (Bailey Schulz/Las Vegas Review-Journal)
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like