Station signs agreement to extend restructuring talks

Friday, May 15, 2009 | 2:37 p.m.

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Station Casinos Inc. of Las Vegas today, as expected, said it signed a forbearance agreement with creditors that will allow restructuring talks to continue with its lenders.

"The company said that the extended forbearance period will permit it to continue ongoing discussions regarding the terms of its restructuring with the lenders and the holders of its notes," Station said in a filing with the Securities and Exchange Commission.

Under the forbearance agreements, the lenders agree not to take action against Station for defaulting on its debt obligations. The latest forbearance, replacing an agreement expiring today, expires on May 29. This is the third such forbearance and is of a shorter duration than the others.

Station is trying to gain agreements with lenders on a prepackaged bankruptcy reorganization that would keep current owners the Fertitta family and Colony Capital in control of the locals gaming operator. Under the plan on the table, bondholders would make concessions while the owners would inject $244 million into the company to shore up its balance sheet that is now weighed down by $5.74 billion in debt.

The reorganization is needed because of the recession, which has reduced revenue and cash flow at Station, hurting its ability to make debt payments.

On Thursday, the company said that in the first quarter of 2009, gross revenue of $307.6 million was down from $378.8 million in the same quarter of 2008.

Operating income and earnings from joint ventures fell from $68.5 million in the 2008 quarter to $29.4 million in the 2009 quarter.

The company declined comment on why the latest forbearance is for two weeks. The earlier forbearances each lasted a month or more.