Las Vegas Sun

June 16, 2019

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Station Casinos settles with creditors over bankruptcy plan

Station Casinos Inc. of Las Vegas has settled with a second group of creditors that had been fighting its bankruptcy reorganization plan, likely keeping the plan on track for approval next week.

In court papers filed Wednesday, attorneys for Station said a group of independent lenders agreed to drop its objections.

The settlement calls for one or more of the lenders to buy $5.95 million of revolving credit commitments in a new Station credit agreement and for Station entities to pay $2 million of the lenders' $3 million-plus in legal fees and expenses.

"The stipulation reflects an important milestone in these chapter 11 cases. If the stipulation is approved, the debtors will have achieved a fully consensual plan, with not a single objection to confirmation of the plan filed by any holders of claims or equity interests, or any other party in interest," Station attorneys said in their filing. "As a result, the debtors and their estates will avoid the substantial administrative fees and expenses they would have incurred litigating, in this court and in the appellate courts, the numerous issues raised by the Independent Lenders during the course of these Chapter 11 cases. By the stipulation, the debtors will also avoid the delay to the restructuring that could have been caused by such litigation, delay that could have derailed the restructuring altogether. Court approval of the stipulation will allow the parties to focus on implementing the plan, rather than litigation."

A hearing is set for Aug. 27 in Reno's U.S. Bankruptcy Court on confirmation of the plan, which calls for 16 Station gaming properties to remain under the management of the founding Fertitta family. The Fertittas, Station co-owner Colony Capital LLC of Los Angeles, key lenders and some current bondholders will all have ownership stakes in the reorganized enterprise.

The independent lenders were last reported to be owed $244 million, but it's unclear what they are currently owed as the composition of the group has changed. The group currently consists of BNP Paribas, Natixis, Sandell Asset Management Corp./Castlerigg Master Investments, Silver Point Capital L.P. and the Bank of Nova Scotia, Station's filing said.

Earlier during the bankruptcy case filed last summer, Station reached an agreement with unsecured bondholders owed $2.8 billion who will see their debt canceled.

Certain bondholders are investing up to $100 million for a 15 percent stake in part of Station.

During the bankruptcy case the bondholders and independent lenders complained the $8.8 billion 2007 deal in which Station was taken private by the Fertittas and Colony Capital resulted in billions of dollars of losses sustained by the bondholders and the independent lenders. They also complained Station's exit from bankruptcy was arranged to favor Station insiders and its lead lenders Deutsche Bank and JP Morgan Chase Bank.

But Station maintained it was treating all creditor groups fairly and it was the recession -- not the structure of the going-private deal -- that caused losses for everyone involved including the Fertittas and Colony Capital.

Two more Station properties -- Green Valley Ranch and Aliante Station -- were not part of the bankruptcy and their owners have been working to restructure their debt. The Greenspun family, owner of the Las Vegas Sun, is Station's partner in those hotel-casinos.

With its revenue slumping because of the recession, Station posted a $69.6 million loss in the second quarter and said costs associated with its Chapter 11 bankruptcy reorganization totaled nearly $38 million during the quarter.

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