Creditors support Station Casinos' reorganization plan

27 August 2010

LAS VEGAS, Nevada -- Station Casinos representatives will walk into the U.S. Federal Bankruptcy Court in Reno this morning with support from nearly 90 percent of the company's secured and unsecured creditors for its two-pronged plan of reorganization.

Given that Station Casinos needs 65 percent of its creditors to sign off on the reorganization, it might not take Bankruptcy Judge Gregg Zive very long to confirm the plan during the hearing.

According to a filing with the bankruptcy court by an independent consultant brought in to tabulate support for the Station Casinos' plan, almost 90 percent of the 17 different classes of secured and unsecured creditors owed more than $6 billion by the company agreed to the reorganization.

Last week, company representatives struck an accord with a small group who had opposed the reorganization. Previously, the company struck agreements with its primary lenders, who controlled the largest chunk of the company's debt, and the official committee of unsecured creditors, who had expressed the most vocal opposition to the reorganization.

Under the reorganization plan, a new holding company was established, owned by real estate investor Colony Capital, secured lenders Deutsche Bank and JP Morgan, and Fertitta Gaming, which was formed by Station Casinos founders Frank Fertitta III and his brother Lorenzo.

The new company would take over Red Rock Resort, Palace Station, Sunset Station, Boulder Station and the Wild Wild West and its adjoining 110 acres. Those casinos provide more than half of Station Casinos' overall revenues.

The Fertittas will put up $85 million for their share of this company.

On Aug. 6, Fertitta Gaming won a bankruptcy-supervised auction to acquire 11 casinos, land holdings and American Indian gaming contracts for $772 million. Fertitta Gaming was the only qualified bidder.

Once the reorganization is confirmed, Nevada gaming regulators and the National Indian Gaming Commission will have to confirm the new corporate ownership structure.

Fertitta Gaming will operate both sides of the reorganized company and the Station Casinos name will remain in place.

Station Casinos filed for Chapter 11 bankruptcy reorganization in July 2009 owing some $6 billion. The company is expected to emerge from bankruptcy with a more manageable debt of $2 billion.

Still to be determined is the future of Green Valley Ranch Resort and Aliante Station, which were not part of the bankruptcy. Station Casinos operates the casinos in a 50-50 joint venture with the Greenspun family and the owners are working to restructure the properties' debt.

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