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Station Casinos files for Chapter 11
Company will continue normal operations with existing management
Published Tuesday, July 28, 2009 | 2:27 p.m.
Updated Tuesday, July 28, 2009 | 7:10 p.m.
Related Documents (.pdf)
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Sun Archives
- Bondholder drops lawsuit against Station Casinos (5-11-2009)
- Station Casinos: Bankruptcy date depends on bondholders (3-18-2009)
- Betting it all on bankruptcy? (2-17-2009)
- Hearing delayed again on Station Casinos site (2-16-2009)
- Boyd responds to Station’s rejection of buyout (3-9-2009)
- Station rejects Boyd’s offer, extends debt deadline (3-3-2009)
- Boyd makes play for Station Properties (2-24-2009)
- Boyd Gaming offers to buy Station (2-23-2009)
- Station responds to lawsuit, misses $15.5M payment (2-17-2009)
- Harrah’s hit with class-action lawsuit over debt plan (2-16-2009)
A History of Station Casinos Inc.
- 1976: Frank Fertitta Jr. opens a 5,000-square-foot property called "The Casino" on Sahara Avenue with 100 slot machines and six gaming tables, it later adds bingo and becomes known as "Bingo Palace"
- 1983: Bingo Palace, after several expansions, becomes "Palace Station"
- 1991: Major expansion project, including a hotel tower, at Palace Station completed
- 1993: Station Casinos conducts an initial public offering and becomes a publicly-traded company
- 1994: Boulder Station opens on Boulder Highway
- 1994: Station Casino St. Charles (Missouri) opens
- 1995: Entertainment complex opens at Boulder Station
- 1995: Station acquires the Texas Gambling Hall and Hotel on Rancho Drive in Las Vegas, renames it Texas Station
- 1996: Barley's, a Henderson brewpub and casino, opens. Station later buys or invests in seven such smaller properties around the Las Vegas Valley
- 1997: Sunset Station opens on Sunset Road in Henderson
- 1997: Station Casino Kansas City (Missouri), opens with two continuously-docked gaming vessels and a land-based entertainment, lodging, and dining facility
- 1998: Station acquires the Wild Wild West casino and truck plaza on Tropicana Avenue in Las Vegas
- 1999: Expansion project at Sunset Station completed
- 2000: Station sells its casinos in Kansas City and St. Charles, Mo., to Ameristar Casinos
- 2000: Station acquires the Santa Fe Hotel and Casino on Rancho Drive in Las Vegas and rebrands it Santa Fe Station
- 2001: Station purchases the Fiesta Casino Hotel on Rancho Drive in Las Vegas, rebrands it the Fiesta Rancho
- 2001: Station acquires the Reserve casino in Henderson from Ameristar, rebrands it the Fiesta Henderson
- 2001: Green Valley Ranch opens in Henderson in partnership with the Greenspun family, owner of the Las Vegas Sun
- 2001: Expansion project at Santa Fe Station completed
- 2003: Thunder Valley Indian casino opens in the Sacramento area
- 2004: Station purchases the closed Castaways Hotel Casino (formerly the Showboat) in Las Vegas, and later demolishes it
- 2006: Red Rock Resort opens in Summerlin
- 2007: In a leveraged buyout by Colony Capital and the Fertitta family, Station Casinos is taken private
- 2008: Aliante Station opens in North Las Vegas in partnership with the Greenspuns
- 2008: Lorenzo Fertitta resigns as president of Station Casinos to focus on the Fertitta family's fast-growing Ultimate Fighting Championship business. Station Chairman and Chief Executive Frank Fertitta III continues to run Station.
- 2009: Station defaults on debt, files for bankruptcy protection
- Source: UNLV Center for Gaming Research, Las Vegas Sun archives
Las Vegas locals gaming leader Station Casinos Inc. and certain subsidiaries filed for a standard Chapter 11 bankruptcy reorganization Tuesday after Station was unable to reach agreement with creditors on a prepackaged bankruptcy deal.
The lack of an agreement with creditors means a plan for the controlling Fertitta family and private equity company Colony Capital to invest more money in the company in exchange for concessions from lenders is off the table for now -- and that the court will sort out the future of the company's assets and debts.
Colony and the Fertitta family took Station private in 2007 in a leveraged $8.7 billion deal that later came under stress when the economy moved into recession -- reducing revenue for Station just as the company faced higher interest costs to finance the takeover.
Los Angeles-based Colony Capital issued a statement Tuesday offering no details on how the company may be restructured, but offered hope that the process "will culminate in a new beginning for a solid, well run business."
Station officials said that under the leadership of Chairman and Chief Executive Frank Fertitta III, they intend to file a reorganization plan that will put the company in a position to capitalize on the opportunities in Las Vegas once the economy turns around.
"Our goal is to keep the company intact" with a stronger capital structure, said Kevin Kelley, Station's chief operating officer.
Bill Lerner, an analyst for Union Gaming in Las Vegas, said the bankruptcy filing will give Station more time to negotiate with lenders. Under bankruptcy law, Station likely will have several months to exclusively propose a plan of reorganization.
After that, creditors can either go along with the Station plan or propose amendments or their own plan. Parties interested in acquiring Station assets will have an opportunity during the bankruptcy process to offer deals either on their own or in collaboration with lenders.
Lerner said lenders will likely end up with a significant equity position in Station, which is what happened with the Tropicana Entertainment bankruptcy and what is proposed with the Herbst Gaming bankruptcy.
Lerner said he is sure Las Vegas-based Boyd Gaming Corp. will seek some of the assets during the bankruptcy process, and said he wouldn't be surprised if Penn National Gaming -- which is interested in expanding to Las Vegas -- also takes a look at the assets.
In the meantime, Lerner said he expects the company's customers, employees and suppliers will be unaffected by the bankruptcy filing.
"I can't imagine there's any risk to the employees, customers and vendors," he said.
Station officials said the company's casino operating subsidiaries did not file for bankruptcy and that the company will continue normal operations at all of its properties under the direction of its existing management. In addition to cash generated from its operating subsidiaries and affiliates, the company has in place an agreement with its senior secured lenders that, subject to court approval, permits it to borrow, as needed, up to $150 million of cash from one of its non-operating subsidiaries.
"Station Casinos is a great company and our 18 casinos and resorts continue to generate positive cash flow, but the global recession has severely impacted our company, just as it has every other company in the gaming industry. The restructuring of our debt will provide us with the financial flexibility necessary to meet the challenges of the current economic environment. Equally important, it will provide the resources necessary for us to continue to invest in our properties, take advantage of opportunities as they arise and ultimately enable us to emerge as a stronger company," Fertitta III said in a statement.
"All of our casinos will continue to operate as usual and we will continue to provide our guests with the same great value and entertainment choices they have always enjoyed at our properties," said Kelley. "From our loose slots, to honoring points earned in our Boarding Pass program, to our great promotions and contests ... it’s business as usual at Station Casinos."
Executives said the company's joint ventures would be unaffected by Tuesday's bankruptcy filings. The joint ventures include casino resorts and casinos jointly owned with the Greenspun family, owner of the Las Vegas Sun; as well as deals with tribes to develop Indian casinos in California and Michigan.
Because of reductions in cash flow tied to the recession, the company is having difficulty serving its debt load of $5.74 billion and in February started negotiating with key bondholders regarding a proposed prepackaged bankruptcy filing. The lenders ultimately were unable to agree among themselves on the deal, in which Colony and the Fertittas proposed to pump $244 million in capital into the company.
But Station still hopes the bankruptcy process will result in a deal with the lenders.
And Colony issued this statement about the filing:
"Station Casinos began the next phase of its restructuring today by filing for Chapter 11 in order to reorganize its capital structure in an appropriate forum. The decision was not taken lightly and we and our advisors believe this move represents the best alternative to protect the company and allow pursuit of our goal to maximize value to the benefit of all stakeholders.
"The sudden and unprecedented upheaval in the markets over the last 18 months and the recession’s outsized impact on tourism, property values and jobs in Las Vegas has had a devastating effect on the gaming industry. Not surprisingly, Station, which is dependent on a growing population and financing for new construction, was especially hard hit.
"The company enters the bankruptcy process with significant liquidity and an internally provided DIP (financing). We believe the process will culminate in a new beginning for a solid, well run business. Colony will maintain its stewardship of the Company throughout the process and we will continue to look for opportunities in the gaming sector as we manage through these challenging times."
Boyd Gaming, which this spring offered to buy all or part of Station, on Tuesday reiterated its interest in acquiring all or part of the company.
David Schwartz, director of UNLV's Center for Gaming Research, said that as the bankruptcy case unfolds, any party interested in acquiring some of the Station assets must recognize that locals' gaming is fundamentally different than the destination gaming market on the Las Vegas Strip.
"The locals gaming market is very sensitive to customer service and word-of-mouth," he said.
He noted that's something Station has been successful at, as it along with Boyd Gaming and Coast Casinos -- now owned by Boyd -- built the Las Vegas locals market.
In a regulatory filing, Station said affiliates filing for Chapter 11 reorganization were FCP Holding Inc., FCP VoteCo LLC, Fertitta Partners LLC, FCP MezzCo Parent LLC, FCP MezzCo Parent Sub LLC, FCP MezzCo Borrower VII LLC, FCP MezzCo Borrower VI LLC, FCP MezzCo Borrower V LLC, FCP MezzCo Borrower IV LLC, FCP MezzCo Borrower III LLC, FCP MezzCo Borrower II LLC, FCP MezzCo Borrower I LLC, FCP PropCo LLC, Northern NV Acquisitions LLC, Tropicana Station LLC, River Central LLC and Reno Land Holdings LLC.
The cases are being jointly administered under the caption "Northern NV Acquisitions, LLC, et al Debtors."
Station's bankruptcy filing listed assets of $5.725 billion and debt of $6.482 billion. The case promises to be complex, as the company estimated it has as many as 5,000 creditors.
Hit hard by the recession, Station in 2008 saw its revenue decline $148.8 million from 2007 while its interest expense increased $113 million because of debt taken on as part of the merger.
The result: Cash flow from operating activities totaled $39.9 million, down $252.3 million from 2007.
In 2008, the company took $2.92 billion in non-cash impairment charges to write down the value of part of the goodwill and other intangible assets that were recognized in the merger.
"The impairment charge is the result of the ongoing recession, which has resulted in decreased projected cash flow estimates, decreased valuation multiples for gaming assets due to the current market conditions and higher discount rates resulting from turmoil in the credit markets," the company said in a regulatory filing.
(Discount rates are what investors demand to be paid for the risk of investing in assets. As discount rates rise, asset values decline.)
Station also reported weaker results for the first quarter of 2009.
Gross revenue of $307.6 million was down from $378.8 million in the same quarter of 2008.
A measure of profitability, operating income and earnings from joint ventures, fell from $68.5 million in the 2008 first quarter to $29.4 million in the 2009 quarter.
Discussion: 33 comments so far…
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That Red Rock location seemed like a white elephant. When I was there it was pretty empty.
and Aliante is a ghost town - Ouch
I like this line: "Station officials today said that under the leadership of Frank Fertitta III...".
Ha ha ha. I find it amusing to see the words leadership and Frank Fertitta III in the same sentence.
I feel bad for the good men and women that rely on Stations for a paycheck and to support their families.
It seems remarkable that none of these locations close down. With Texas Station and Fiesta Rancho only 4.4 miles from Santa Fe Casino on the same road it seems like one business takes from the other.
"It is business as usual at our 18 operating properties," Kelley said. "Team members, guests and vendors are going to be treated just as they always have been for the last 33 years."
In other words you will continue getting screwed.
Boycott Stations
See 'er Later!
Don't worry, the Vultures are already overhead circling.
Damn. I hope this doesn't mean more layoffs. I have a friend who works at Sunset Station, so I hope he won't be fired. I've also appreciated all the workers at Green Valley Ranch, and I hope none of them will lose their jobs.
To ATDLEFT
You cant possibly be serious..its already started..
The unfortunate part, most business owners have family and friends at the top..and you learn when its to late they didn't do their jobs..( 1st hand knowledge speaking )..Too bad, III is going to learn the same lesson..the same way...
Loose slots are they kidding. They should be made to sell off their properties. Trump strung his properties for years until it was sold . Fertitta has money it's in the UFC. Unfortunately service will be affected. Boycott stations until they are sold.
Loose slots is a joke -- at least in Texas Station, the machines are wound so tight they go boing!!
nothing shocking here, really.
man, you KNOW at some point the greenspun media group had a meeting today and it went something like this...
"folks, we get 90% of our advertising revenue from station casinos...do any of you have family or friends that have businesses that might want to advertise?"
i've hated this company ever since that publicity stunt they tried to pull last summer where they were going to build condos on the parking lot at the henderson fiesta so the employees could have affordable housing.
so...instead of just paying your people a little more each week...so they could afford a place to live...you'll build condos for them so the can live in the parking lot of where they work?
nice.
I am not at all surprised by the bankruptcy filing. For example, when we ate at the Red Rock last night, the dinner rolls were very stale.
Filing in Reno? A total chickenshot thing to do. Obviously the Fertittas are trying to hide the content of the files, and make it difficult for small creditors to make and prosecute claims in the case.
A note to unsecured creditors: Get together, and file a motion, right away, to move the case to Las Vegas, where it belongs, as Station's principal place of business.
Please take Harrah's to hell with you. Thanks.
Bloomberg's online bankruptcy column always reliably reports the lead case number for every major bankruptcy. For those of you lawyer-readers with PACER, the case to look for supposedly is:
In Re Station Casinos Inc., 09-52477, U.S. Bankruptcy Court, District of Nevada (Reno).
Steve Green is reporting, from Station's SEC filing, that Station wants the case entitled Northern NV Acquisitions, LLC, not Station Casinos Inc., as Bloomberg reports.
Jim Rhodes tried the same cr@p, hiding his companies bankruptcies under an obscure subsidiary's name, but Bankruptcy Judge Linda Riegle wasn't having any of it and she designated the lead case as "Rhodes Companies". So, we'll see whether Station gets to hide its bankruptcies under the phony case name, or not.
For those who love to read intimate details of private companies, the Chapter 11 Petitions for all of the Station entities which filed bankruptcy can be viewed for free at:
http://www.kccllc.net/stationcasinos
This is a website set up as part of bankruptcy court custom, so that "the little people" who are owed money can keep track of what is going on. The website is paid for by the debtors, but in the "first day hearings" the Bankruptcy Court judge usually signs an order that the website be established.
The cool stuff is on the tabs at the left side of the page.
If you look at the Voluntary Petitions tab, you can see the details disclosed as to who owns each entity, and a ballpark estimate of how much is owed to creditors of each entity. I breezed through the petition for Station Casinos, Inc. and saw that the list of unpaid creditors is 111 pages long.
If you look at First Day Motions, you'll see that Station has filed emergency motions, which the ask the judge to grant ASAP:
003 Motion to maintain cash management procedures;
004 Motion to authorize payment of wages/benefits and to order banks to honor paychecks;
005 Motion to pay pre-bankruptcy taxes and regulatory fees and to order banks to honor those checks;
006 Motion for joint administration of multiple cases;
007 Motion to borrow additional cash, and use lenders' cash collateral;
008 Motion to prohibit utilities from shutting off water, power, natural gas & phones;
009 Motion to prohibit interference with delivery of supplies and to pay some pre-bankruptcy suppliers;
010 Motion to authorize continued maintenance of workers comp and other insurance
According to the free view website, there is not date set yet for the hearing of those motions. However, except for #007, bankruptcy judges routinely grant those motions, so employees should not be rattled.
It's fairly clear that Colony Capital is calling the major shots in the bankruptcy case, because they have hired the "white shoe" New York law firm of Milbank, Tweed, Hadley & McCloy LLP to be the debtors' lawyers, through that firm's Los Angeles Office. To comply with the Nevada Bankruptcy Court rule that all debtors must have a "local" bankruptcy attorney as well, the Reno office of Lewis & Roca is also representing the debtors.
Sounds like a smart FAMILY.Get the merger money right in time!
I bet they having a hard time in deciding what to do next specially they got so many employees that was trying to have a good job and making money for their family too bad that was happen. I wish Station casinos will not reduce employee.
how is this douchebag fertitta III get paid $150 millions in bonus boggle my mind. its alway little people that get f@#ked over just like goverment did to us.
i personally think you can kiss this company goodbye, i would expect parts to be sold off soon and a lot of people will lose their jobs...
Oh yeh I nearly forgot this will make houseprices go up... NOT !!!
i stayed a few times at the palace station - liked the small casino - but why did they open up a new one in november?? They should all have a 4 sale sign on the front - start over
let this be a warning to all you people just going out and snapping up foreclosure homes thinking you're going to rent them out...
the demand is going the WRONG WAY, folks.
Let's get one of the facts right: In 1976 The Casino was opened by Carl Thomas. Frank Fertitta Jr came along later and bought it from him due to Carl losing his gaming license. Frank Jr is a very decent man, unfortunately his sons haven't learned what loyalty means from him.
Congratulations Frank & Jill on your new home.....The fifth-highest sale price in Orange County history. You really know how to rock the system. Nothing like a fresh clean start.
Maybe you can have a beach front barbecue and serve up some fresh meat on these buns you're about to burn.
106 Emerald Bay, Laguna Beach: sold to Frank J. Fertitta III, believed to be a principal owner of the Las Vegas Station Casino as well as the Ultimate Fighting Championship, the county's fifth-priciest sale.
As reported in the Register's South Coast Homes blog, a luxurious beachfront property along Emerald Bay's "street of gold" closed escrow two days ago for what was the fifth-highest sale price in Orange County history.
It also was just the ninth home in the county to fetch more than $20 million.
According to the Multiple Listing Service, 106 Emerald Bay sold for the asking price of $32,995,000, according to Register blogger Kelli Hart. Be aware, however, that prices specified in the MLS aren't always accurate.
Still, homes along that strip of beachfront land are among the most valuable residences in Orange County. The property at 106 Emerald Bay is just three doors away from Crested Wave, which is O.C.'s second-place property with a sale price of $34.5 million.
So (drum roll, please), here's a countdown of the top 10 sales prices ever paid in O.C., based on county records:
1) Bayshore Drive, Newport Bay: $35 million paid by Jerry Herbst, owner of Las Vegas-based Terrible Herbst, to actor Nicolas Cage in January 2008.
2) Crested Wave, in Laguna Beach's Emerald Bay: $34.5 million paid by Louis Welch who is president of Irvine-based LA Fitness International LLC in February 2008.
3) Riviera Drive, Laguna Beach's Irvine Cove: $30.1 million, July 2007.
4) Riviera Drive, Irvine Cove: $29 million, March 2005.
5) 106 Emerald Bay, Laguna Beach: $28 million, sold to Frank J. Fertitta III, believed to be a principal owner of the Las Vegas Station Casino as well as the Ultimate Fighting Championship.
6) Hale O Pau Hana, Corona del Mar: $27.1 million, April 2008.
7) Sugarloaf Point, Laguna Beach: $25 million, sold in the spring of 2007 by Supermarket magnate Ron Burkle, who built the home on a site once owned by the late singer Ricky Nelson.
8) Riviera Drive, Irvine Cove: $23 million, May 2006.
9) Cotton Point, San Clemente: $21 million, November 2006, located on the grounds of President Nixon's former Western White House.
10) Master's Circle, Newport Coast's Pelican Hill: $19.5 million, paid in November 2006 by Henry T. Nicholas III, the billionaire co-founder of Irvine's Broadcom Corp. who currently is facing federal charges of securities fraud and drug trafficking.
This is GREAT!! What goes around, comes around! I don't want to go into the lengthy details at this moment, but I just want to say that I have had personal dealings with Station Casinos and the Fertitta family. They are creeps in my book and deserve this happening to them for the way that they treated and screwed me back in 1997. It took a lot of praying and waiting all these years for this to happen, but now I can say it was all worth it!!
The creditors should push the court to turn their debts into equity (100%) and push the Fierros out. Name all new management and wipe out the current shyster owners.
When the lay off's start I hope they use the "change" method to decide who gets the axe first. It's simple, just go through the employees parking lot and note which cars have "change" or "Obama" bumper stickers, give them the "change" the voted for, no job!
ya, i love how all the bleeding hearts in this town voted him in and then he says "now is not the time to be going to vegas".
haha.
idiots.
but, hey...he's got "shovel ready" jobs for ya'll. that job is to dig the grave of democracy.
2 interesting articles on the history and finances of the fertittas
http://southcoasthomes.freedomblogging.c...
http://unlimitedfightnews.com/wordpress/...
After staying away from all station casinos for a few years i took an out of town guest so they could get a players card.After only 15 minutes we had both lost a 100 bucks,and not even a cocktail!Nothing had changed since the last time i went in.I was raped in a matter of minutes! I hope this opens the door for the mob to come back? Oh ya,what do i care,vegas wore out its welcome for me about 8 years ago!And that was after 20 years liveing here! GOOD LUCK LOST AND WASTED!
For the Fertitta haters in the audience, if you think they're gonna get dinged, fuggetaboudit. They got their money out with the LBO, and they're not putting it back in. If they lose control of the company, it isn't that big a loss, since, with all the debt, it's a loser anyway.
I think some properties will get sold off, but whatever entity is left will keep most of what it has now. The bondholders will end up with most of the stock. And the Fertitta's will keep some part, and will likely keep running it.
Bring on BOYD! Respectable people that run a first class operation.