Las Vegas Sun

October 24, 2014

Currently: 64° — Complete forecast | Log in | Create an account

Station rejects Boyd’s offer, extends debt deadline

Image

LAS VEGAS SUN file

The Texas Station and the Fiesta are part of the package that Boyd Gaming offered to purchase from Station Casinos, which is on the verge of bankruptcy, for $950 million.

Updated Tuesday, March 3, 2009 | 5:33 p.m.

Text of letter from Frank J. Fertitta III to Boyd executives

  • The Board of Directors of Station Casinos, Inc., together with our financial and legal advisors, has reviewed Boyd’s unsolicited non-binding preliminary indication of interest set forth in your February 23, 2009 letter. As you know, our Company is in the process of soliciting consents from our lenders with respect to a pre-packaged plan of reorganization that would result in a restructuring of substantially all of our debt. Our Board has made no determination to pursue, nor has the Company taken any steps toward pursuing, a sale of all or any portion of the Company’s assets. In reviewing Boyd’s indication of interest letter, the Board considered, among other factors, the non-specific, non-binding and highly conditional nature of the Boyd proposal, the risks to the Company in sharing sensitive and confidential information with a significant competitor, and the uncertainties and timing risks associated with pursuing the proposal, including the feasibility of obtaining necessary third party consents and required regulatory, antitrust and other governmental approvals. The Board also considered the potential harm that would result to the Company’s stakeholders if such a proposal was delayed or could not be completed, whether as a result of the foregoing factors or Boyd’s potential inability to perform due to its own financial position. In light of the foregoing, and for other valid considerations, our Board has concluded that it is in the best interests of the Company and our stakeholders to proceed with the current restructuring plan. Should circumstances change, we will contact you.

Station Casinos Inc. of Las Vegas said Wednesday it's not interested in entertaining Boyd Gaming Corp.'s offer to buy part of Station.

And with bondholders apparently hoping for a better deal, Station said today it extended the deadline for the note holders to vote on a debt-exchange deal that would leave the current owners in place after a proposed bankruptcy reorganization.

The deadline of Monday night was extended until April 10.

In a letter to Boyd that Station disclosed today and that was dated today, Station Chairman and Chief Executive Officer Frank Fertitta III said Station will continue pursuing its previously announced reorganization plan. That plan would leave he and his brother Lorenzo Fertitta and Colony Capital in charge of Station.

"In reviewing Boyd’s indication of interest letter, the (Station Casinos) board considered, among other factors, the non-specific, non-binding and highly conditional nature of the Boyd proposal, the risks to the company in sharing sensitive and confidential information with a significant competitor, and the uncertainties and timing risks associated with pursuing the proposal, including the feasibility of obtaining necessary third-party consents and required regulatory, antitrust and other governmental approvals,'' the letter said. "The board also considered the potential harm that would result to the company’s stakeholders if such a proposal was delayed or could not be completed, whether as a result of the foregoing factors or Boyd’s potential inability to perform due to its own financial position.''

"In light of the foregoing, and for other valid considerations, our board has concluded that it is in the best interests of the company and our stakeholders to proceed with the current restructuring plan,'' the letter said.

Boyd spokesman Rob Stillwell said Boyd planned to respond to the Station letter on Wednesday.

"We remain interested in acquiring all or some of the assets of Station Casinos,'' he said in response to Station's letter.

Separately, Station said it entered into forbearance agreements with its key note holders and lenders -- meaning they won't take action against Station during the forbearance period, ending April 15, for the company falling behind on debt payments for those notes.

"These forbearance agreements will provide the company with additional time to continue discussions regarding the terms of its plan of reorganization with its lenders and the holders of its senior and senior subordinated notes,'' Station said.

Analysts have said bondholders may be looking for a better offer from either Station's owners or from Boyd, the Las Vegas company that offered to buy some of Station's Las Vegas casinos for $950 million and has expressed interest in buying the entire company.

Station, the dominant player in the big Las Vegas locals gaming market, said Feb. 3 it was proposing to swap high-cost debt for low-cost debt and cash. It also proposed a capital infusion of $244 million by casino executives and owners Frank Fertitta III, and Lorenzo Fertitta, vice chairman; and by co-owner Colony Capital; and a plan to have the transaction approved through a prepackaged bankruptcy filing.

Station has offered some investors 10 cents to 50 cents on the dollar, depending on the bonds they hold, in secured notes and cash, in exchange for about $2.3 billion of existing bonds. The plan has been challenged in court by some bondholders, but Station says their case has no merit.

The plan would save Station an estimated $100 million per year in interest and debt expenses, a key savings considering the company's cash crunch caused by the recession.

Station has projected revenue fell 19 percent in the quarter ending Dec. 31 to $290 million.

Steve Green can be reached at 990-7714 or [email protected].

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy

Previous Discussion: comments so far…

Comments are moderated by Las Vegas Sun editors. Our goal is not to limit the discussion, but rather to elevate it. Comments should be relevant and contain no abusive language. Comments that are off-topic, vulgar, profane or include personal attacks will be removed. Full comments policy. Additionally, we now display comments from trusted commenters by default. Those wishing to become a trusted commenter need to verify their identity or sign in with Facebook Connect to tie their Facebook account to their Las Vegas Sun account. For more on this change, read our story about how it works and why we did it.

Only trusted comments are displayed on this page. Untrusted comments have expired from this story.

No trusted comments have been posted.