Las Vegas Sun

March 29, 2024

Station Casinos, bondholders settle dispute

Updated Wednesday, July 28, 2010 | 7:25 p.m.

Station Casinos properties

The clock tower of the Boulder Station hotel-casino obscures the resort's 15-story tower. Launch slideshow »

A development in the Station Casinos Inc. bankruptcy case Wednesday may clear the way for the Las Vegas company to avoid continued litigation as it emerges from bankruptcy with the founding Fertitta family still in control.

Station filed court papers saying it has reached a settlement with bondholders owed $2.8 billion who have been fighting Station’s reorganization plans. That $2.8 billion reported in bankruptcy papers Wednesday is higher than the previously reported unsecured noteholder debt of between $2.3 billion and $2.5 billion.

“The settlement negotiations have been successful,” Station’s filing said, adding some of the bondholders have agreed to invest up to $100 million for a stake of up to 15 percent in a company that will control five Station “PropCo” properties.

The PropCo properties are Red Rock Resort, Boulder Station, Sunset Station, Palace Station and the Wild Wild West.

Those properties would be managed by Fertitta Gaming LLC and would be owned by Fertitta Gaming, Station co-owner Colony Capital LLC, the bondholder investors and banks holding the mortgage debt against the properties.

An auction for 11 more “OpCo” Station properties is set for next week, with the new Fertitta-led company the “stalking horse” bidder, or the bidder to beat for those casinos.

Those properties include Santa Fe and Texas Station and two Fiestas. The Fertittas could use the $100 million from the bondholders during the auction.

Two more properties — Green Valley Ranch and Aliante Station — aren’t part of the bankruptcy or the auction and Station said in court papers Wednesday that efforts continue to restructure their debt. The Greenspun family, owner of the Las Vegas Sun, is Station’s partner in those properties.

Attorneys for the bondholders, organized as the Official Committee of Unsecured Creditors, couldn’t immediately be reached for comment on the deal.

The settlement is expected to result in the extinguishment of the $2.8 billion in bondholder debt — which has been trading at levels far below the face amount. Certain bondholders would gain warrants and investment rights in the new company formed by the Fertittas, Colony Capital and the PropCo lenders.

“We are extremely pleased to have reached an agreement with the Unsecured Creditors’ Committee to support the proposed restructuring of Station Casinos Inc., including our bid for the OpCo assets,” said Marc Falcone, chief financial officer of Fertitta Gaming LLC. “Pursuant to the agreement, certain bondholders have agreed to invest up to $100 million to acquire up to 15 percent of our new company, which funds will be used, among other things, to aggressively pursue our proposed acquisition of the OpCo assets.”

The deal is seen as a major step forward for Station, as the bondholders will now support Station’s reorganization plans.

The bondholders in recent weeks had appealed several rulings in the case including the OpCo bidding procedures — charging the bidding was rigged to favor Station insiders and their lenders — and were seeking permission to sue Station insiders.

Their proposed suit, which is now off the table, would have complained the 2007 deal that took Station private harmed bondholders by loading the company with excessive additional debt and dooming it to failure.

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