Facebook
Fark
Digg
Reddit
Stumblegaming:
Station Casinos: Bankruptcy date depends on bondholders
In court filing, company fights injunction sought by bondholder
Station Casinos is the dominant locals gaming company with properties such as Red Rock Resort, Green Valley Ranch Resort, two Fiestas and the Sunset, Boulder, Palace, Santa Fe and Texas Station properties. Aliante Station is shown here.
Published Wednesday, March 18, 2009 | 2 a.m.
Updated Wednesday, March 18, 2009 | 6:58 p.m.
Sun Archives
- 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)
- Station Casinos sued over reorganization plan (2-13-2009)
- Regulators keep tabs on Station, proposed restructuring (2-13-2009)
Station Casinos Inc. executives moved Wednesday to clarify when the company may file for bankruptcy protection, saying there's no assurance the filing will be made on or before April 15 as suggested in a court filing.
Scott Nielson, executive vice president and chief development officer, said the plan for Station to file for bankruptcy on or before April 15 mentioned in court papers would only kick in if Station reaches agreement with major bondholders on a plan for Station to file a prepackaged bankruptcy petition.
He said that if an agreement is not reached with the bondholders by an April 10 deadline, a forbearance agreement now in affect through April 15 could be extended so negotiations could continue. If the forbearance agreement is extended, Station has sufficient cash and cash flows to maintain operations after April 15, he said.
Another option, one not favored by Station, is for the company to make a regular Chapter 11 filing. That could happen if an agreement with bondholders is not reached.
One of the reasons the prepackaged bankruptcy is being sought by Station is because it would leave Station's operations running normally with little or no affect on customers, employees and vendors, Nielson said.
In the meantime, he said, Station executives and employees continue working "to provide the best guest experience possible.''
As first reported by the Sun, the April 15 date was mentioned in court papers filed Monday by Station opposing a motion for a court injunction sought by a bondholder who is seeking to block the debt-exchange, a key part of the pre-packaged bankruptcy petition that includes a cash infusion of $244 million by Station owners the Fertitta family and Colony Capital.
Boyd Gaming Corp., in the meantime, has been taking its case to buy all or part of Station directly to bondholders after it was rebuffed by Station.
With its revenue and cash flow hurt by the recession, Station has proposed the prepackaged Chapter 11 bankruptcy reorganization because of its inability to keep up with debt payments. In all, it's trying to restructure more than $5 billion of debt.
In U.S. District Court in Las Vegas, bondholder S. Blake Murchison is represented by class-action securities lawyers who are seeking an injunction to block the exchange offer in which Station would reduce its debt by exchanging $2.3 billion in bonds for cash and notes at exchange rates of 10 cents to 50 cents on the dollar, depending on the class of bond held. The deal is aimed at saving the company some $100 million per year in interest costs.
The bottom line, Murchison argues, is that the exchange offer will improperly subordinate existing bonds during a Station bankruptcy and that only certain classes of bondholders are allowed to vote on the deal.
Station, however, argues Murchison's case is without merit because all note holders will receive the same payment for their classes of bonds, regardless of whether they are allowed to vote on the exchange offer.
In court papers, Station called Murchsion a "gadfly'' who is represented by securities lawyers in also suing Harrah's Entertainment Inc. over a Harrah's debt-exchange deal.
Station said the debt-exchange and reorganization plan should move forward for the good of the Las Vegas community, where Station is the dominant locals gaming company with properties such as Red Rock Resort, Green Valley Ranch Resort, two Fiestas and the Sunset, Boulder, Palace, Santa Fe, Texas and Aliante Station properties.
"To the extent that plaintiff believes there is something improper about the prepackaged bankruptcy plan that Station is pursuing, he may pursue his rights with all other creditors in the bankruptcy case (which Station expects to file on or before April 15),'' Station said in court papers opposing the injunction.
"Plaintiff's motion is an attempt by a single bondholder (represented by a prominent class action law firm) to gain leverage by acting as the 'fly in the ointment' and seeking to halt the efforts of Station to restructure its business in a manner designed to minimize the costs and business interruption that would be caused by a lengthy bankruptcy case,'' Station argued, adding a prepackaged bankruptcy is a more efficient way for it to restructure its debt.
Station said it "will be irreparably harmed if the injunction is granted.''
"Station will, in effect, be stripped of the ability to pursue a prepackaged bankruptcy plan and will be forced to commence its Chapter 11 case immediately. Station will lose the ability to streamline the restructuring proceedings. And Station's creditors, employees and the local community will suffer immensely as a result,'' Station said in its motion opposing the injunction.
"The public interest is particularly compelling here. In this economic environment, which has hit Las Vegas particularly hard, the public interest strongly favors an expeditious restructuring,'' said Station's motion.
"Station employs over 13,000 people and plays an important social and economic role in the local community. There is no reason to needlessly jeopardize the economic health of this company and its various constituencies so that a single bondholder can pursue spurious claims outside of the established restructuring process.''
Station also filed a declaration by General Counsel Richard Haskins saying that the institutional holders of bonds that are voting on the Chapter 11 reorganization plan represent, among the note holders, a super-majority in interest and a majority in number.
Station is represented in the suit by attorneys Todd Bice and Debra Spinelli of the Las Vegas law firm Brownstein Hyatt Farber Schreck; and by Jerry Marks and Daniel Perry of the Los Angeles firm Milbank, Tweed, Hadley & McCloy.
Steve Green can be reached at 990-7714 or steve.green@hbcpub.com.
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.
Post a comment
Most Popular
- Viewed
- Discussed
- E-mailed
- Coolican: Henderson officials out of loop on police brutality case, raising red flags
- Lumberjacks — ‘Where the Big Boys Eat’ — hiring for North Las Vegas location
- Berkley draws stark contrasts with Heller over immigration
- Howard Miller, prominent lawyer and ‘true Las Vegas native,’ dies at 68
- Two dead after accident in downtown Las Vegas
- Instant Analysis: Debating whether UNLV should continue series with San Diego State
- Short memories may serve president
- Superstar Whitney Houston dies at 48
- Police looking for man in white Ford Explorer
- Saying ‘No mas’ to government
Blogs
The Kats Report
Color from scene at Thomas & Mack: We have a wire job! Rebels win, and Louie Armstrong sings!
South Point owner Michael Gaughan's take on 'Vegas Stripped': 'I'll give it an 8' (4 Comments)
Author relishes writing the life story of ‘larger-than-life’ Oscar Goodman (3 Comments)
Elsewhere
Landowner: All roads could lead to Uxbridge casino
Revel reveals smoke-free casino opening
Cirque du Soleil show in Sands China casino to close this month
Meet the woman behind Sheldon Adelson
The Sun
Locally owned and independent for more than 50 years.
With bankruptcy protection the judge can also alter the union contracts and force lower wages and benefits on the employees. This must be great news for Nevada.
Stations needs to be rid of the Fertitta's
Stations I believe is non-union
with so many jobs at stake, I just hope something good comes from this mess the Fertittas created.....geezus
So, video poker players, what do you think the payback on Stations' machines is going to be from now on?
You think it's bad now? Just wait until they're in bankruptcy and they need every penny they can steal. You'll put $100 in the machine and you'll never get ahead to the point where you can "cash out with a profit and go home."
Stations will never give you that chance.
Stations jumped the shark when whip cream was removed from the breakfast buffet.
Enjoy your 120 degree summer, the Midwest will be in 70s in 2 weeks.
Station should close it's doors and sale off all it's property. Let them all go out and find themselves a new job, like the rest of us.
"The public interest is particularly compelling here. In this economic environment, which has hit Las Vegas particularly hard, the public interest strongly favors an expeditious restructuring,'' said Station's motion.
Since when did Stations care about public interest? If they did, they would not have sent jobs overseas. If they did, Stations would pay standard industry wages and benefits. If they did, Stations would not try to monopolize the market so they can minimize comps and lower payouts. If they did, why did they eliminate 'Jumbo Jackpots,' yet continue with lower payouts on their slots?
The Fertittas, Sartinis and Colony Capital are simply engaged in an old-fashioned game of lien stripping. Think of them as home owners who refinanced their home two years ago for about $6 billion. They took out the equity ($6B), but the market value of the house is now less than the $6B they owe, so they use the "economic climate" as cover to have a court refinance that $6B debt to what the house is currently worth - according to them, of course. They make off with the $6B from the original refinance loan, then get to bail on what they owe "because of the compelling public economic interest." The subordinate lienholders are stripped of any meaningful recovery, their contracts are legally overturned, the Fertittas et al. maintain control of everything, and our new age of Deadbeat Economics sees one more champion walk among the ranks. In the end, a deadbeat and welsher is still just a deadbeat and welsher. Fifty years ago, the Fertittas and Sartinis would have been knee-capped in a back room. Today, they're viewed as "smart, tough business people."
Taos at the Santa Fe use to be our favorite restaurant until it was changed into a poker room and replaced with a joint that charged double...never went back.
The Chrome Room at the Santa Fe is probably the best indoor entertainment center in town...Awesome Wednesday night Blues Bands, use to video the shows until someone made an issue about it...never went back.
The online sports book from the Santa Fe claims to round payouts to the nearest nickel, when it was discovered that they always rounded DOWN to the nearest nickel...stopped using the service.
Gave Stations (Santa Fe) numerous attempts at my entertainment dollars but reason seem to always get in the way.
No plans at ever going back.