Key lenders agree to Station Casinos reorganization plan

By Steve Green

Published Monday, April 19, 2010 | 10:47 a.m.

Updated Monday, April 19, 2010 | 5 p.m.

Station Casinos Inc. of Las Vegas today said certain creditors have agreed to support a plan in which the Fertitta family, Colony Capital and key lenders would control the entire company.

The Fertittas and Colony earlier agreed to take an ownership stake in four big hotel-casinos that are being foreclosed on by lenders. Those properties are called the PropCo properties and are Red Rock Resort, Sunset Station, Boulder Station and Palace Station.

Under a deal announced today, an agreement has been reached between Fertitta Gaming LLC, which is owned by brothers Frank and Lorenzo Fertitta, and a steering committee representing more than 60 percent of the company’s senior secured bank debt, to support Station's plan of reorganization.

These lenders, called the "Opco Lenders" have agreed to support a $772 million “stalking horse” bid by a newly-formed company to be owned by Fertitta Gaming, Colony Capital and the mortgage lenders to the PropCo properties.

Station said the $772 million bid is to purchase the OpCo assets of the company, in addition to the PropCo properties. These additional assets include Santa Fe Station, Texas Station, Fiesta Henderson, Fiesta Rancho and Indian gaming projects.

The company didn’t immediately say whether the $772 million bid would include Station’s joint ventures with the Greenspun family, owner of the Las Vegas Sun. These include Green Valley Ranch resort in Henderson and Aliante Station in North Las Vegas. A Greenspun affiliate in a separate bankruptcy case is trying to replace Station as manager of Green Valley Ranch, charging mismanagement there. Station has denied those allegations.

“We are pleased to have reached agreement with the steering committee of the Opco senior lenders on the acceptance of our stalking-horse bid and our plan of reorganization. This agreement is another important step toward maximizing the value of all of the Station Casinos’ properties for the benefit of our team members, guests, lenders and the Las Vegas community,” said Frank Fertitta III, chairman of the board and chief executive officer of Station Casinos.

Bondholders have yet to weigh in on the reorganization plans.

Similar to the Fontainebleau Las Vegas auction process, the proposed Fertitta/Colony stalking horse bid, if authorized by the court, would be the bid to beat by other parties interested in buying Station assets.

The proposed stalking horse bid was disclosed in court papers filed today in Station's bankruptcy case. The papers outline proposed bidding procedures for the Station assets, other than the PropCo properties.

The papers say Station will entertain bids for all or any portion of the OpCo properties; and joint bids for all or some of the OpCo Properties.

As for the PropCo deal, which was announced March 24, the Fertittas, Colony Capital and the PropCo lenders would hold on to Red Rock, Sunset Station, Boulder Station, Palace Station, the Wild Wild West hotel-casino and land holdings at Cactus Avenue and the southern end of Las Vegas Boulevard.

The Fertittas and Colony Capital would pay $85.6 million for a 50 percent stake in the new PropCo company. That company would assume $1.6 billion in mortgage debt against the PropCo properties.

Hearings on Station's reorganization plan are set for July 15 and July 16.

Competitor Boyd Gaming Corp. of Las Vegas, which has offered to buy Station for $2.45 billion with no success so far, issued this statement today:

"The press release issued today regarding the OpCo assets contained very little in the way of detail about Station's efforts to reorganize its debt, a process that has now been going on for more than a year. We remain interested in acquiring Station assets and look forward to reviewing the plan when it is made available to the rest of the creditors."