Boyd going after Station's assets

2 November 2009

LAS VEGAS, Nevada -- Boyd Gaming Corp. filed a motion Sunday in Station Casinos' bankruptcy proceedings, asking the court to allow the casino operator to submit a reorganization plan for its financially troubled rival.

According to the motion, Boyd Gaming, which was rejected when it offered to buy a large chunk of Station Casinos in February for $950 million, is asking the U.S. Bankruptcy Court in Reno to appoint an examiner so other parties can offer competing reorganization plans.

The most likely scenario from a potential Boyd plan would be the acquisition of all or part of Station Casinos, which operates 18 properties in Las Vegas, Henderson and North Las Vegas.

Station Casinos filed for Chapter 11 bankruptcy protection at the end of July.

Last week, the company asked the bankruptcy court for a four-month extension to exclusively propose a plan to reorganize its finances. The current deadline is Nov. 25.

In its motion, Boyd Gaming said it was not opposed to Station Casinos receiving an extension until March to file its reorganization plan.

Boyd Gaming is also a creditor in the bankruptcy, having acquired a stake in Station's debt.

But Boyd wants an outside party to evaluate Station Casinos' assets.

"Boyd believes that the highest priority issue currently before this court is to evaluate sales alternative that realistically could compete with (Station Casinos') attempts to reorganize with insider-retained equity," according to the motion.

Boyd wants an examiner to share information with both Station Casinos and other interested parties, which would allow the reorganization process to move forward on a quicker basis.

In the filing, Boyd Gaming said it is unable to make another offer for Station Casinos until its rival's finances and properties have been evaluated.

Boyd said Station Casinos' management never realistically considered its February offer. Boyd said anything learned by the examiner wouldn't be "competitively harmful" to Station Casinos.

"Boyd expects that the expert serving in that role will arrange to provide the data needed for informed bidding, so that potential buyers like Boyd can provide data on value that (Station Casinos) cannot dismiss as being too hypothetical, conditional or nonbinding," the motion stated.

Boyd Gaming spokesman Rob Meyne declined comment beyond the 38-page filing.

Station Casinos spokeswoman Lori Nelson declined comment on the filing.

Boyd Gaming Chief Executive Officer Keith Smith said last week the company has a $2 billion credit revolver, once designated for the now-delayed Echelon, which can be directed toward acquisitions.

He said Boyd was serious about acquiring all or a portion of its rival.

"Let me be clear. This is a serious offer," Smith said. "Bankruptcy can be a distracting and expensive process, and it does not appear to be in the best interests of anyone for this to drag on."

Smith said buying key assets within Station Casinos' 18-property portfolio in Southern Nevada makes sense for all parties, including Boyd Gaming shareholders, customers, and Station Casinos' creditors, employees and customers.

"We can deliver more value to the creditors with a fair offer and these assets," Smith said. "We believe strongly in the long-term viability of the Las Vegas market."

Station Casinos filed for bankruptcy protection on July 28 with roughly $6.5 billion in long-term debt.

Creditors are feuding over portions of Station's November 2007 transaction in which it was taken private by an affiliate of Los Angeles-based investment firm Colony Capital and the Fertitta family, which founded the company.

One group of creditors believes Station Casinos' board may have had conflicts of interest when it rejected Boyd Gaming's offer to buy most of Station Casinos' assets and when it arranged financing for the company's buyout.

The lenders are questioning whether the buyout's financing, which is divided into three stacks of loans, each with different investors but all controlled by Station Casinos' board and administrating bank, Deutsche Bank, might be improperly benefiting the company and its primary lenders at the expense of the smaller lenders.

Company attorneys told the judge extending the timeline could save time and money while allowing Station Casinos to come up with a plan "that has the best possible chance of success for the reorganization of the Debtors' businesses."

Station Casinos also manages an American Indian casino near Sacramento, Calif.


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