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St. Louis-based Isle of Capri Casinos Inc. has agreed to manage four Station Casinos Inc. properties, including the Red Rock Resort, if they are spun out of Station’s bankruptcy case.
Wednesday, Jan. 6, 2010 | 4:50 p.m.
Beyond the Sun
St. Louis-based Isle of Capri Casinos Inc. on Wednesday confirmed reports by Debtwire that Isle has agreed to manage four Station Casinos Inc. properties should they be spun out of Station’s bankruptcy case.
Isle entered into a “consultancy agreement” with certain lenders to “assist the lenders to be prepared to take over the assets to the extent necessary," company spokeswoman Jill Haynes said.
The agreement would enable Isle of Capri to operate the properties for the lenders, led by Deutsche Bank, should Station fail to maintain control of them in bankruptcy court.
The agreement covers Palace Station, Boulder Station, Sunset Station and Red Rock Resort.
Isle of Capri is already in the process of being licensed in Nevada because of a deal for a casino in Northern Nevada unrelated to the Station Casinos situation.
Isle has 13 gaming operations in the United States in Black Hawk, Colo.; Lake Charles, La.; Lula, Biloxi and Natchez, Miss.; Kansas City, Caruthersville and Boonville, Mo.; Bettendorf, Davenport, Waterloo and Marquette, Iowa; and Pompano Beach, Fla.
The four Station properties are encumbered by $2.475 billion in debt and are leased by Station from itself, with the lease payments of $249.5 million annually covering the mortgage payment.
Other creditors have attacked the lease arrangement, charging the rent is excessive.
Holders of the $2.475 billion in mortgage debt, in compromising last month to allow a temporary reduction in the rent, indicated their willingness to take over ownership of the four hotel-casinos in order to preserve their interests as lenders.
But bondholders owed $2.3 billion and other unsecured creditors are asking the bankruptcy court to cancel the deal spinning off the four hotel-casinos into a Station subsidiary called PropCo.
They want the debt associated with those casinos and the lease canceled so that the revenue produced by the four PropCo properties is available to all creditors – and so that those four casinos are classified as assets that can be used to satisfy all of the creditors in the case.
Bankruptcy Judge Gregg Zive has set a Jan. 25 hearing on the request by the creditors that they be allowed to sue Station and its bank lenders to cancel the PropCo arrangement and to assert fraudulent transfer claims related to the $8.8 billion 2007 leveraged buyout deal that took Station private.
Yet another factor in the bankruptcy case that could prevent Isle of Capri Casinos from managing the four PropCo properties is an offer by Boyd Gaming Corp. to buy all of Station, with its 18 gaming properties in Southern Nevada and an Indian casino in the Sacramento area, for $2.45 billion.
While Station has resisted efforts that it be acquired by Boyd, creditors in the bankruptcy process will have additional opportunities to press for a Station sale to raise cash to cover some of their debts.
Station had no comment Wednesday on Isle of Capri’s deal to manage the four properties. Station has until March 25 to exclusively propose a plan of reorganization.
I don't understand how the heck Boyd would spend 2.45 billion dollars buying Station , when they can't even finish the mess they created at the old Stardust sight!
Because the old Stardust site is one property. They would love to be able to instantly gain Stations Market share. Besides you dont want to operating on the strip right now. Its a losing business at this point.
This should be good news for Station employees. It's highly unlikely Isle of Capri will make any wholesale changes, given they are only operating under a management contract.
Putting aside bad investment decisions, Stations is a well run company. Isle of Capri will undoubtedly bring in some of their people in the key management positions, but the rank and file should remain the same.
Stations employees should be pleased with this development. It appears that Deutsche bank has come to terms with the fact that Stations will not be able to comprise a restructuring plan that will enable them to keep control of their PropCo entities. In reality, how could they? It makes sense for Deutsche to hang on to the properties with an experienced casino operator running them, and wait for the market to get better, when they can sell them off and get a better return on their investment.
taking stations "private" was just a scam to rape the company and leave it in shambles--if this bankruptcy system really worked they would void that hole deal and make the insiders give the money back! Hope boyd doesn't get hold of these casinos--they are cheap with both the customers and employees and just suck out whatever money they can without putting almost nothing back into the properties--look at the main street, fremont, jokers wild, eldorado--on and on they bought all of these properties in bankruptcy and spend almost nothing on the properties and pay crumbs to the employees.
An instant half million savings to whomever takes over....get rid of SuperBookie and sidekick SmacCormick and get a real Race and Sports Book 'Super' Bookie.
A response to KJTchoup's comment:
I don't think that Isle of Capri is going to get any management contract for the 4 casinos. Three things would have to happen first:
(1) The mortgage lender on the 4 casinos would have to get permission from the bankruptcy judge to foreclose. That isn't going to happen until after March 25th, when up until that date Stations' current management has the exclusive right to propose a reorganization plan. Mortgage lenders can't get permission to foreclose until after that exclusive period to propose a Chapter 11 Plan expires.
(2) The mortgage lender on the 4 casinos will not get permission from the bankruptcy judge to foreclose if the other major parties to the case are screaming against it, which they will be. The other key parties are (a) the unsecured creditors who want ownership of the 4 casino buildings to be transferred to them; (b) Stations Casinos current management, who want to "buy back in" to an entity reorganized through a Chapter 11 Plan; (c) the lenders secured by all of the Station Casinos operating company's personal property assets, who want those 4 casinos to "stay in the fold" to produce revenue to pay them; and (d) the investors who bought pieces of "mezzanine loans" to Station Casinos, Inc. subsidiaries from German American Corporation (a Deutsche Bank subsidiary) and who again need the cash flow off the 4 casinos in order to get paid anything.
(3) Stations' management would have to blow their March 25th deadline to file a proposed Chapter 11 Plan and then other groups of creditors would have to file a proposed Chapter 11 Plan which would take the 4 casinos away from the rest of the company, and the majority of each group of creditors would have to vote in favor of that plan.
To me, this publicity leak is just another "bugga bugga" to try to embarass, upset or scare Stations Casino's management, or to create a paper trail making the mortgage lenders on the 4 casino buildings look like they are truly separate from the Deutsche Bank/Fertitta/Colony Capital juggernaut who are controlling the case.
Deutsche Bank is in the power position in this bankruptcy. If they want a Fertitta/Colony entity to manage and partially own the debtors through a Chapter 11 Plan that will happen. If Deutche Bank can make a better deal with Boyd Casinos, that will happen. If Deutsche Bank can make an even better deal with Isle of Capri, that will happen.
However, the bottom line is that Deutsche Bank knows it is serving 3 constituencies on loans it arranged, and to protect its business reputation among investors, Deutsche Bank is going to do its best to make sure all 3 groups economic interests are protected in the outcome of the bankruptcy cases. Letting 1 of those groups foreclose on 4 of the most valuable casinos will not accomplish that goal.
the isle is in Florida and new years eve - they had lots of people - putting money in and none coming out. Yeah - lets just build a gambling hall on the stardust site so boyd can get off this station train.
KJTchoup
Are you familiar with Isle of Capri?
I ams From the South and very familiar with them.
It would be better if Boyd bought them trust me.
If their is going to be a management contract agree on it is only because Deusch Bank is involved with Isle of Capri on other properties and the unsecured lenders will get jerked around if Isle takes over.Boyd would be a smart purchase.And as fars as jobs Isle will come in and hack all tthe managment jobs for sure and bring in their own people.Isle does not have operating experience in a highly competitive gamming market.only Bilouxi Ms do they have compitition Natchez MS only casino there and closest is in Baton Rouge La and Vicksburge MS
The Natchz Ms casino is so small you can hardly turn around in it They also tried the Tunica Ms market but failed and closed it.They were one of the first casinos in Vicksburge MS and as others moved in they busted and sold out So I just do not believe they are capable in handling the Las Vegas market
Oh, good Lord. Isle of Capri business culture would fit well with Palace and Boulder Station, but honestly they are a hillbilly operation and would degrade Sunset and especially Redrock. Does anybody plan on checking out their business practices before letting them enter into the Las Vegas market? You should see the schlocky casino they operate in Boonville, MO. It's hideous and the food is pig swill!
Seems like a great deal for Isle, but as mamabear points out, Red Rock is out of their league! Most Isle properties are bottom tier properties. Remember when they owned Lady Luck? They took a bath on that deal and never made it work...not that any one has since then. Anyway, CynicalObserver makes some great points too. I think DB is just trying to ruffle Station Management here. I would be VERY surprised if this ever comes to fruition.
I don't care who gets control of Stations as long as those scum sucking Fertittas are out.
As long as they charge ridiculous resort amenity fees at Boulder Station and keep the poker room as a smoking facilities, while the pool looks like trash and the rooms like trash, too, it takes more than a motobike and an emergency situation to get me into Boulder Station again. This dump had all chances but screwed up with mostly everything. The only good thing there, that's the remodelled buffet. Tip of my hat, but that buffet is good and has an excellent price/value...especially when you have a 2-for-1 coupon on hand.
From Switzerland
To KJTchoup:
The only Station's employees who would consider this anything REMOTELY resembling "good news" are those who were lucky enough to keep their jobs at our more recently-acquired properties (i.e. Texas, Santa Fe, Fiesta, Aliante, etc.). Those of us who (mistakenly, it turns out) remained loyal to Palace, Boulder, Sunset, and, to a lesser extent, Red Rock Station, are about to see our careers imploded with one swipe of Judge Zive's pen. To suggest that the "rank-and-file" will remain the same is to deny credence to our decades of service to THIS COMPANY AND OUR CONTRIBUTIONS TO ITS SUCCESS.
We don't want to work for Deutche Bank, and we certainly didn't anticipate these back-door deals (PropCo, etc.) would lead to our impending demise as dedicated (non-union!) employees, and yet it seems it has!
No, employees of "PropCo" SHOULD NOT be pleased with this turn of events, nor should any other current Stations workers. For the moment, THEY may enjoy their fleeting victory (gainful employment at the expense of those who helped make the company the astounding success it WAS), but I have no doubt THEIR JOBS are every bit as precarious as ours, and it's just a matter of WEEKS before one judge's ruling wipes out THEIR years of service as well as ours.
I would stay a few nights at Aliante Station, and definetely gamble my share, under the following conditions:
- the room rates must be re-adjusted to 39.95 midweek and 59.95 weekends, plus tax, BUT WITHOUT USELESS RESORT FEE. I am not travelling with my laptop and I also don't need no shoeshine an no newspaper in the morning. So why would I have to pay for shid I don't need?
Get realistic, Station managers, don't charge the people for stuff you thought it's a great idea having it but stuff that nobody really wants....and you will get your customers back to the properties.
Greetings from ice cold Switzerland
I would stay in a Stations property again if they eliminated the resort fees. Even if the room rate goes up an extra 5-10 dollars or so.
By loyal_employee...It's not the judge who would wipe out jobs, but the company itself. The Fertittas already have a history of eliminating jobs by acquisition (Santa Fe), so clinging to Stations management is no guarantee your job is safe either.
They do a good job in the Midwest, very professional.
Boyd will end up with the Station properties because they have CASH, something that is missing in Las Vegas at the moment.
I don't want Boyd Casino taking over Stations. Look how they run their own properties.They have the tightest slots, lousiest Buffets, and their restaurants having been going downhill. The only thing they have is money. Hopefully the bankruptcy judge goes another route. Maybe we should have Maloof take over RED ROCK.
Cynical Observer:
Always love your posts. I have to think a little more about what you said.
Loyal Employee:
Love your loyalty to Stations, but I think you're a bit misguided. I do agree with you that Stations is a great company, but I think you are confused as to my point. I'm simply stating that Isle of Capri will keep the Status Quo when they take over. If Deutche bank were to sell Stations, there is a very real possibility that many things would change immediately with new ownership.
A management company is unlikely to make wholesale changes, so thing should remain as is for a little bit, at least.
Now station casinos needs to get bought out very bad management cause all this for them lets go back to there car a day in May when in that month everyone played there they made tons of money then the first day it paid all there bills i was a Employees then i move on to better things station casinos offer nothing for the dedicated players why i still go there i just dont know they need to get sold they are known back when they bought other palces to get bigger fired the employees they did back when they bought out the santa fe casino thye are laying off ppl now and hire temps throgh an agency well i guess so they dont have to offer Insurance on them what hurt them was greed going private buy back all the stock so let them just get bought out