Summerlin casino dependent on debt, earnings levels

Tuesday, Sept. 10, 2002 | 11:20 a.m.

Station Casinos Inc. announced Monday that the timing of its previously announced hotel-casino project in the affluent Las Vegas suburb of Summerlin will largely depend on the company's ratio of debt to cash flow.

Unlike the company's previous projects, the casino's timing also will depend on its scope and budget, which remain to be determined.

"(T)he project's timing is completely in our control," Station Casinos' Chief Financial Officer Glenn Christenson said. "In the past we have constructed new projects and expanded existing facilities on an accelerated time frame to meet strategic objectives. This project is different in that the competitive landscape on the west side of town will not be measurably affected by our competitors in the future."

The company said it won't begin the project unless it can maintain a debt to cash flow ratio, or "leverage ratio," of 4.5 during the construction process. Cash flow is a key metric in the casino industry that measures earnings before interest, taxes, depreciation and amortization.

The company's careful approach to the project coincides with its focus on reducing debt, the company said. The company also may shrink its capital base by repurchasing shares.

Station Casinos has not yet named its planned casino, which will be located at Charleston Boulevard and I-215 in the Summerlin master-planned community. The company expects to close on an option to buy about 70 acres of land during the second quarter of 2003.