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August 20, 2019

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Station Casinos wants to block competitor from seeing its financials

Station Casinos properties

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Station Casinos Inc. of Las Vegas is asking its bankruptcy judge to reject efforts by competitor Boyd Gaming Corp. that Boyd have a look at Station's detailed financial information.

On Nov. 1, Boyd filed court papers supporting a motion by a minority group of lenders that an examiner be appointed to study Station's finances.

Boyd also said Station's request for a four-month extension to exclusively file a plan of reorganization should be conditioned on Station providing potential casino buyers detailed property-by-property financial numbers.

Station responded Thursday, with attorneys for the Las Vegas locals gaming leader charging that Boyd is trying to manipulate the bankruptcy process in order to gain a competitive advantage.

At the same time, they suggested, Boyd is creating problems for Station by causing employees and customers to wonder whether Boyd will be taking over some of the Station properties.

Station has repeatedly shown no interest in entertaining Boyd's offer to buy some or all of Station's assets — an offer subject to a due-diligence study of Station's books. But Boyd is continuing to pursue the issue in the bankruptcy case.

"Apparently frustrated by its unsuccessful attempt to pick off and dismantle its chief competitor’s assets prior to the commencement of these (bankruptcy) cases, Boyd is now interjecting itself into these proceedings in a calculated effort to manipulate the bankruptcy process so that Station Casinos and other parties in interest are denied a fair opportunity to reorganize and continue profitable operations," Station said in Thursday's filing.

The backdrop of the situation, the Station attorneys said, is that "competition has become even more cutthroat in the current bleak economic environment, particularly in the Las Vegas locals casino market where all market participants are struggling with sharply reduced revenues."

"Boyd’s motion should be seen for what it is — an attempt to gain information which will put it at a competitive advantage, while at the same time seeking to raise doubt in the minds of Station Casinos' team members and guests as to the ultimate outcome of the bankruptcy process in order to disrupt Station Casinos' business, on which it will try to capitalize," the filing said.

Station questioned whether Boyd even has standing to intervene, as Boyd hasn't filed a claim as a creditor. Boyd has said it has obtained some Station debt, but won't say how much.

Station attorneys also said it's premature to be talking about a sale of its hotel-casino assets. Station has 18 casino properties in the Las Vegas area and its biggest competitor is Boyd with its Sam's Town, Gold Coast, Orleans and Suncoast properties.

"No one engaged in the negotiations regarding reorganization is advocating an auction-type sale of assets or of the debtors; plan negotiations have not yet run their course. Until the plan negotiation process fails, it is premature to pursue any sale process,'' Station said. "If the plan negotiations ultimately fail, other alternatives will, at that time, come under review.

"The key parties in interest in the cases will have an opportunity to consider alternative courses of action. But the process should not be driven by considerations that benefit the debtors’ competitors or would-be bidders. Boyd should not be allowed to hijack this process to advance its own interests," Station said.

Boyd offered this response Thursday to Station's filing: "Obviously, we disagree with the position Station has taken in its reply. Station had previously characterized Boyd as not being serious in our interest in buying Station’s assets. One purpose of our motion was to correct this mischaracterization and to make our serious interest in acquiring these assets crystal clear. The bankruptcy court will determine how these issues are resolved and we look forward to participating in that process.''

Station was taken private by members of the founding Fertitta family and Colony Capital of Los Angeles in 2007. It filed for bankruptcy protection in July after the recession reduced revenue at its hotel-casinos and it was unable to service its $6.49 billion in debt.

Station has been resisting a request by the minority lenders and Boyd that an examiner look into the 2007 deal. Some creditors charge that deal is now short-changing them while benefiting other lenders.

The requests for appointment of an examiner and Station's request for more time to exclusively file a plan of reorganization are due to be heard during a Nov. 20 hearing.

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