Fertittas win Station Casinos bankruptcy auction

By Cy Ryan

Published Friday, Aug. 6, 2010 | 11:50 a.m.

Updated Friday, Aug. 6, 2010 | 1:23 p.m.

RENO – A final roadblock may have been removed to permit Station Casinos Inc. of Las Vegas to emerge from a more than year-long bankruptcy case with the founding Fertitta family still at the helm.

Paul Aronzon, attorney for Station, said Friday that an agreement has been reached with a second group of unsecured creditors, calling it a “milestone.”

He told federal Bankruptcy Judge Gregg Zive Friday that this “paves the way” to get final approval from creditors to the plan by the Las Vegas company to emerge from bankruptcy.

Attorney Eric Goldberg, representing these independent lenders, said there was a framework for a settlement in place, “but the devil is in the details.” These lenders were last reported to be owed $244 million.

“There may be objections to the confirmation,” he said referring to the Aug. 27 hearing for the judge to approve the plan to emerge from bankruptcy.

Zive said, however, it appears that confirmation will be “consensual.”

Aronzon said he hoped the settlement with the independent lenders could be wrapped up in the next week.

In a hearing that took less than 40 minutes, Zive approved the “stalking horse” bid of $772 million submitted by members of Station's founding Fertitta family and their lenders to retain 11 casinos that were put on the auction block.

Station was termed the only “qualified” bidder for the properties. Boyd Gaming Corp. of Las Vegas had considered bidding, but dropped out, saying the process was rigged to favor Station insiders -- charges denied by attorneys for Station.

After the hearing, Scott Nielson, executive vice president of Station, said this means all of the properties will continue under the Fertitta family's management if the bankruptcy plan is approved Aug. 27.

This bankruptcy process, said Nielson “has allowed us to shed some debt and emerge a much stronger company from a financial standpoint.”

“It gives us a fresh start,” and the opportunity to focus on friendly service and good value, he said.

Station filed for bankruptcy more than a year ago with close to $6 billion in debt.

During the court proceedings, Station reached an agreement with unsecured bondholders owed $2.8 billion. In exchange for up to a 15 percent interest in five of the casinos, the debt will be canceled.

Some of these bondholders have agreed to invest up to $100 million for the 15 percent stake in the "PropCo" unit that owns Red Rock Resort, Boulder Station, Sunset Station, Palace Station and the Wild Wild West. PropCo is to be owned by its mortgage lenders, the Fertittas, Station co-owner Colony Capital LLC of Los Angeles and the bondholder investors.

The bondholders had earlier complained the 2007 deal in which Station was taken private by Fertitta and other Station insiders and Colony Capital had harmed the bondholders by overwhelming the company with debt and dooming it to default and bankruptcy. The bondholders have agreed to stop pursuing that claim.

The 11 casinos that were on the auction block included Santa Fe Station, Texas Station, Fiesta Rancho in North Las Vegas, Fiesta Henderson and the Wildfire Boulder and the Gold Rush Casino.

Not included in the bankruptcy proceedings were Green Valley Ranch and Aliante Station, where Station is in partnerships with the Greenspun family, owner of the Las Vegas Sun. Nielson said these casinos were going through their own debt restructuring process.