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StumbleStation Casinos, lenders agree to rent decrease at 4 properties
Friday, Nov. 20, 2009 | 7:51 a.m.
Station Casinos Inc. and key lenders have reached an agreement to temporarily slash the rent that Station pays to lease from itself four of its most valuable hotel-casinos.
Station said in a court filing late Thursday that under the deal with Deutsche Bank and other lenders, the rent will be reduced by about $7.7 million per month for December, January and February. The rent will be about $13.8 million per month during this period, Station said.
It's unclear if the agreement will be considered during a bankruptcy court hearing today for Station in Reno.
Station, in its court filing, noted the recession has reduced cash available to pay the rent and that the rental arrangement has been under attack by creditors in the bankruptcy case.
When Station was taken private in 2007, four hotel-casinos were spun off into a company called PropCo, which is managed by Station.
Station has been paying $250 million per year to lease the PropCo properties, with the rental payment covering debt encumbering the properties totaling $2.475 billion.
Creditors have demanded this arrangement be reworked, saying the rental and mortgage amounts are unrealistic given the recession that has reduced the value of the hotel-casinos. They want some of the cash used for the rent to be made available to all creditors.
The four properties in PropCo are Red Rock Resort, Sunset Station, Boulder Station and Palace Station.
The deal disclosed Thursday includes provisions in which Station, should it choose to reject the lease and turn the properties over to lenders, would continue to operate the properties under Station's gaming licenses for up to 150 days.
The deal also says if Station turns the properties over to the mortgage-holders, it will re-pay the lenders the deferred rental amount.
"The provisions in the compromise agreement ... enable the debtors to operate effectively in Chapter 11, while simultaneously preserving the rights of Station Casinos and PropCo ... under the master lease until such time as Station Casinos makes a decision to assume or reject the master lease either as part of a plan of reorganization or otherwise," Station said in its court filing.
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why is this all being decided in reno
This whole going private, renaming a management company, then charging Stations such high rent sounds to me like the owners cashed in on the buy back, screwed the stockholders, then continued to cash in on the rent. Where was the SEC on this one? I smell a rat...
There was no stockholders after going private, however there were bondholders, those that hold the debt. Terribles has the same arraingments where the Hearst brothers own the land but terribles leases the casinos.
I haven't read the documents, but this looks like a Hail Mary pass by Deutsche Bank and Station Casinos to try to convince the Bankruptcy Court judge not to appoint an Examiner to look into the company's alleged self-dealing.
The fact that this is only a rent reduction for 3 months makes it seem the parties to the deal want to, in effect, rescind it, if their effort to prevent the appointment of an Examiner fails.
So I look forward to the news of whether the Bankruptcy Judge did his statutory duty and appointed his Examiner, or whether, like all other things in the Banana Republic of Nevada, even a Federal Bankruptcy Court Judge can be "persuaded" despite the express text of Federal law.
Steve Green, please make sure to phone the unsecured creditors lawyers and find out what happened in court today. Win or lose, they will give you the straight story.
lets rearrect the stardust!!!!!!!!!!
I'm with you boomeranddalejr. I think that Fblue should be blown up and make a new and improved Stardust and then have the mob run it, the mob may get their cut but how many casino's went bankrupt back in the day. The mob made sure that the casino's always made money and made sure that people kept coming. Station's should keep paying what they do and bit the bullet, why do these big company's get breaks from their financial problems.
are you guys completely nuts? You can't just implode a building that cost about 2 billion dollars and is closer to be finished than from the beginning. A blow-down of this construction and a new start of the new Stardust would cost billions. This building is almost finished. Why not using this one and simply rename it to The New Stardust?