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April 18, 2014

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Fertitta family, lenders maintain highest bid for Station Casinos properties

Bankruptcy court filings today confirmed that no one has stepped up to out-bid a group led by the Fertitta family in Friday's auction of certain Station Casinos Inc. properties.

With Boyd Gaming Corp. of Las Vegas dropping out of the bidding July 30, charging the process was rigged to favor the insiders, Station founders the Fertittas and participating lenders and investors may win the auction for the group of 11 properties with their "stalking horse" bid of $772 million -- unless Station's bankruptcy judge entertains bids for individual properties.

The properties to be auctioned are called OpCo properties and include four Las Vegas locals hotel-casinos: Two Fiestas, Santa Fe Station and Texas Station.

Lenders and the Fertittas together have arranged to spin out of the bankruptcy five more PropCo properties: Red Rock Resort, Sunset Station, Boulder Station, Palace Station and the Wild Wild West.

Bondholders who had been fighting the plan reversed course last week and now are investors with the Fertittas in PropCo and potentially OpCo.

Two more properties are not in bankruptcy and are not part of the auction: Aliante Station and Green Valley Ranch Resort. Station's partner in those hotel-casinos is the Greenspun family, owner of the Las Vegas Sun. The partners are working to restructure the debt of those properties outside of the Station bankruptcy process.

Lazard Freres & Co. LLC investment manager Daniel Aronson, who has been working with the bidders in behalf of Station Casinos, said in a court filing today that the OpCo properties were marketed to 79 parties and that 39 parties received confidentiality agreements.

Eight parties submitted letters of intent by the bidding deadline, one of which was disqualified. Other than Boyd, the bidders have not been identified.

Of the seven remaining bidders, Boyd expressed interest in bidding for all of the OpCo properties while six bidders were interested in only selected assets.

Some of the selected asset bidders apparently had talks with Boyd about submitting a combined bid for some or all of the OpCo properties, but it's unknown what came of those talks.

The bottom line, Aronson said, is that after the final bid deadline of July 30 passed, no qualified bid had been received for all of OpCo and two "non-conforming" bids were received for potential purchases of unspecified "real property."

"In light of the foregoing facts, Lazard believes that the stalking horse bid is the highest and best bid for the OpCo assets that is available to the debtors to date," Aronson's filing said.

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