Station Casinos gets approval for bankruptcy plan

By Cy Ryan

Published Friday, Aug. 27, 2010 | 12:49 p.m.

Updated Friday, Aug. 27, 2010 | 1:53 p.m.

RENO – Federal bankruptcy Judge Gregg Zive on Friday approved a plan for Station Casinos to emerge from bankruptcy.

Thirteen months ago, Station Casinos entered the bankruptcy court faced with a $6.6 billion debt and the possibility of selling off some of its 18 casinos.

Zive said the plan “does provide the best opportunity to maximize these assets.” He said it protects “a great number of jobs” in the company, which employs 12,000 workers.

Thomas Kreller, a Los Angeles lawyer representing Station, said that despite the approval of the judge, “the work is not over.”

The plan has to be put into effect and state gaming regulators still have to approve the changes within the company.

Under the plan, Station reached an agreement with unsecured bondholders owed $2.8 billion who will see their debt canceled. Some bondholders are investing up to $100 million for a 15 percent stake in part of the company.

A settlement with other lenders calls for them to buy $5.95 million in revolving credit commitments in a new Station credit agreement and for Station to pay $2 million of the lender’s $3 million-plus costs in legal fees and expenses.

Under the plan the casinos will continue as one company with the Fertitta family still managing the operation.

Kreller said there will be an eight-member board of directors. The Fertittas and the creditors each will choose three members. The Fertittas will then select the final two that must be approved by the creditors.

He said there were no objections to the final reorganization plan and all 17 voting classes overwhelmingly agreed to accept it.

After approval by Zive, Scott Nielson, executive vice president of Station, said “This plan will make us a much stronger and healthier company going forward.”

Nielson said the company was grateful to the team, guests and creditors for support through the reorganization process. The company suffered an $855 million operating loss in 2009.

At one time during the 13 months of proceedings, 11 casinos were put up for auction, but the Fertittas and lending group put up a “stalking horse” bid of $772 million. There were no other bids.

Judge Zive said the case became “contentious” at times but ended up with a “consensual plan.”

”There was no unfair discrimination,” the judge said in approving the settlement. “It does not prejudice any party in interest.”

Not included in the bankruptcy reorganization were Green Valley Ranch and Aliante Station. They are working to restructure their debt. The Greenspun family, owner of the Las Vegas Sun, is a partner with Station in those two operations.

There were more than 20 lawyers in the courtroom for the final hearing that lasted nearly two hours.