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StumbleStation Casinos reorganization plan: Sell several properties
Published Thursday, March 25, 2010 | 6:40 a.m.
Updated Thursday, March 25, 2010 | 3:39 p.m.
Sun archives
- Station Casinos reaches deal with key lenders, hopes to emerge from bankruptcy (2-25-2010)
- Bankruptcy judge urges Station Casinos, creditors to negotiate (1-25-2010)
- Fertittas seek to block creditors’ lawsuit in Station bankruptcy case (1-12-2010)
- Station Casinos bondholders want permission to sue (12-29-2009)
- Culinary Union sides with Station Casino’s creditors (11-23-2009)
- Culinary Union statement critical of Station Casinos (11-19-2009)
- Creditors want to expand probe of Station Casinos deal (11-19-2009)
Station Casinos Inc. filed a reorganization plan in its bankruptcy case Wednesday proposing the sale of its interests in certain land holdings and 13 of its 18 gaming properties.
Four major hotel-casinos generating the bulk of the company's revenue and a fifth property would remain under control of the reorganized Station Casinos, which would be owned by lenders to those properties and existing Station owners Colony Capital of Los Angeles and the Fertitta family of Las Vegas.
Those major properties are Red Rock Resort, Palace Station, Boulder Station and Sunset Station and are known as the "PropCo" properties. The fifth property is the Wild Wild West motel and casino and associated land on Tropicana Avenue west of Interstate 15.
Court records show the Fertittas and Colony Capital would pay $85.6 million for a 50 percent stake in the new company holding Red Rock, Palace Station, Boulder Station, Sunset Station, the Wild Wild West and certain land holdings -- and that company would assume $1.6 billion in mortgage debt. The Fertittas would manage these five properties.
The Fertittas would own 46 percent of the reorganized company and Colony Capital would hold 4 percent. Since there are several lenders, the Fertittas would be the largest shareholder.
"Reaching a deal on the PropCo Properties marks a significant step toward the restructuring of Station Casinos," Frank Fertitta III, chairman of the board and chief executive officer of Station Casinos, said in a statement. "I’m committed to the successful reorganization of the company that my family founded."
The plan, if approved, would lead to the sale of the remaining company assets.
The assets include Indian casino management contracts as well as Texas Station, Santa Fe Station, Fiesta Rancho, Fiesta Henderson, Wildfire Rancho, Wildfire Boulder, the Gold Rush, Lake Mead Casino and the company's 50 percent interest in Green Valley Ranch Resort, Aliante Station and the smaller Barley's, the Greens and Wildfire Lanes.
The assets to be sold include extensive land holdings in California (1,321 acres), the Reno area (200 acres) and at key gaming-entitled sites in the Las Vegas Valley at Durango Road and the southern Las Vegas Beltway, Town Center Dive and the Beltway and in Henderson's Inspirada development. The land holdings also include 52 acres south of Palace Station planned as a retail, entertainment and residential development.
Besides keeping the Wild Wild West acreage, once proposed as the site for a $10 billion "Viva" megaresort that would compete with Las Vegas Strip properties, the new Fertitta-run company would continue to own gaming-entitled land at Cactus Avenue and the southern end of Las Vegas Boulevard.
The Greenspun family, owner of the Las Vegas Sun, is Station's partner in Green Valley Ranch, Aliante Station and the smaller 50 percent-owned properties. A Greenspun affiliate is suing in a separate bankruptcy case to remove Station as the manager of Green Valley Ranch Resort in Henderson, charging mismanagement there. Station has denied those allegations and said they were made by a disgruntled fired former manager.
Based on their previous interest in expanding in the Las Vegas market, potential bidders of the assets to be sold likely would include Boyd Gaming Corp., Penn National Gaming and investor Carl Icahn. Icahn controls Las Vegas-based Tropicana Entertainment and the mothballed Fontainebleau resort. The Fertittas are also expected to bid for the assets, which the company hopes will be sold as a package and not separately.
"Frank and Lorenzo Fertitta remain keenly interested in these properties and Fertitta Gaming would like to aggressively pursue the acquisition of these assets," said a statement from Marc Falcone, chief financial officer of the brothers' company Fertitta Gaming.
Lorenzo Fertitta has served as a Station director since 1991 and was its president through June 2008. He co-owns Zuffa LLC, the parent company of the Ultimate Fighting Championship, and has served as its chairman and chief executive since June 2008.
"The plan contemplates that Station Casinos will conduct an orderly sale process for the ... properties on a going concern basis, under the supervision of the Bankruptcy Court and in a manner designed to procure the highest and best transaction available," Station said in court papers.
Station said the reorganization plan is supported by lenders of nearly all of the $2.475 billion in debt encumbering Red Rock, Palace Station, Boulder Station and Sunset Station.
Bondholders owed $2.3 billion have yet to weigh in on the plan. Attorneys for the bondholders, organized as the bankruptcy case's Official Committee of Unsecured Creditors, said Thursday they had no immediate comment on the reorganization plan.
Station's filing extends for 60 days the period in which Station alone can file a reorganization plan.
The bondholders have previously sought permission to sue Station over 2007's $8.8 billion going-private transaction in which the company was sold to Colony and the Fertittas, charging the deal crippled Station with an additional $1.7 billion in debt.
Station last reported in November that its debt and liabilities totaled $6.8 billion -- a sum the company has been unable to service because the recession has reduced spending at its hotels and casinos. Station's inability to meet its debt obligations and the refusal of some creditors to agree to a consensual reorganization led to last summer's Chapter 11 bankruptcy filing.
Station, which has been targeted by a Culinary Union labor organizing campaign, said in Wednesday's filing that after emerging from bankruptcy it intends to "mitigate the impact on its team members of the restructuring process."
Workers at the new Fertitta-run company would receive pay increases and restoration of a match for their 401(K) investment plan and the new company would "take other steps to ensure that its team members enjoy competitive wages and benefits," Station said in its filing.
Culinary Union Secretary-Treasurer D. Taylor issued this statement in response to the reorganization plan:
“Workers are organizing to form a union at Station Casinos and what is important to these workers is not who ends up running their casinos and what financial maneuverings are going on in the bankruptcy proceedings, but that their jobs, benefits, and rights are protected. They have suffered greatly at Station Casinos. Their retirement benefits have been slashed, their health insurance costs have gone up, and hundreds of workers have lost jobs as a result of subcontracting. These workers are concerned about their future and their ability to take care of themselves and their families and that is why they came to the union. They don’t want their employer, whoever it may end up being, to be able to turn their lives upside down on a whim. They also want their right to form a union to be respected. They don’t want to be harassed, intimidated or coerced simply because they support the union.”
Station has denied union charges of harassing workers supportive of the union.
Besides being a potential bidder for assets if Station's reorganization plan is approved, Boyd Gaming on Thursday signaled the reorganization plan itself may face objections.
"Based on the limited information Station has provided regarding their proposed reorganization plan, it appears to favor Station insiders and includes the transfer of certain unspecified 'OpCo' assets to PropCo. Such a transfer of assets could harm the value of OpCo at the expense of creditors. It's important to note that Station’s entire plan of reorganization will be unsuccessful without the support of the OpCo creditors," Boyd said in a statement. "We remain interested in acquiring all of Station’s assets and continue to believe that Boyd Gaming is in the best position to offer maximum value to Station’s creditors, and to protect the interests of its employees, customers and the Las Vegas community."
The "OpCo" assets Boyd referred to are Station assets other than Red Rock, Palace Station, Boulder Station and Sunset Station.
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Yeah and those properties are not worth anything right now...
They won't be able to give Aliante Station away....
I'm surprised they aren't keeping GVR.
if you would have told someone in 2004 that this would ever happen, they would have said you were nuts.
ever since that p.r. stunt of them saying they were going to build apartments (dorms) in the parking lot of fiesta henderson so they're employess could live there because they couldn't find affordable housing, i have wished ill-will on this company.
so...instead of just PAYING them more...so they COULD afford housing someplace...you're going to build apartments for them?
wow, how generous.
Those of us whom live near Aliante Station have come to call it "Aliempty". I feel like I have my own casino up here.
Deeeeeeeeeep recession!
OK THANK YOU FOR THE INFORMATION!
I heard a rumor in a joke, that GVR was built on an ancient indian burial ground. I'm beginning to believe it is true
Death by a thousand cuts...more like jobs than cuts. What the underlying message here is we haven't hit bottom. There are more job losses coming; it almost feels like it's feeding on itself.
What I don't understand is why anyone would plunk down an additional $85,600,000.00 (wow, look at all those zeros) into a losing proposition. That is just sending good money after bad. Someone is just plain stupid (but, that appears to be normal these days with casino executives).
Man, these Fertitta's love playing MONOPOLY!
In this particular game, they will keep Boardwalk & Park Place, and give you Baltic & Mediterranean, & throw in a couple RR's.
With the casinos failing, how much longer will the family continue to lose money with this paper?
So they are keeping the newest (besides Aliempty) and most profitable ones and selling the rest....which they intend to bid on! Sounds like self-dealing at the sake of the debt holders. Still very interesting. TBC.
I heard that Neiman1 is going to outbid Carl Ican on the fountainblue
and call it NeimanBlue1
this paper is nothing more than a "loss leader" to funnel people into their real estate (american nevada / green valley)...look at the banner ad at the top...business, casinos, vegas.com website (a major cash cow), and their tourist publications.
the actual "paper" hasn't been profitable for them for over a decade.
Apparently people are taking the advice of the "Dave Ramsey Show" and staying home and eating beans and rice. Hooray for nut - talk radio!
cynicism not sinnicism.
Has anyone in Nevada ever graduated high school?
Great point, tvegas!
I'm a Vegas native, and am highly-educated. There are just as many stupid people moving here as there are stupid people born here.
Besides, boinicotti has made the exact same comment on a bunch of articles attacking environ (with the same deplorable grammar & spelling). Sounds like someone has a little too much time on their hands.
good news a settelment
This is just more foot-dragging.
Boyd clearly states that they're willing to acquire the whole kit-and-kaboodle. A sale to a single buyer has got to be easier than selling off the lesser assets, and trying to retain the better ones.
gmag39 had it right, "In this particular game, they will keep Boardwalk & Park Place, and give you Baltic & Mediterranean, & throw in a couple RR's."
The only people making money are the Bankruptcy lawyers. Has anyone been in Texas Station or the Fiestas lately ? They play the music so loud u can hardly hear yourself. I hope Boyds doesn't buy any Of Stations.They Can't run their own properties ( Suncoast and Orleans)
I am sorry, but the Greenspuns have a case when it comes to how Green Valley Ranch was being fleeced out of anything of quality for Red Rock's success. Look at how Station's immediately called the GM a disgruntled employee? Sorry, but he was right with what he said about what was taking place at GVR.
GVR took advantage of the locals by giving a take it or leave it attitude with their customers. No real value.
They do a reality show where they act like they are big time players. Not so much anymore.
Please let this group of hotels be bought up by some new blood and not some corporate mega company. Look at how the Rio is just a joke with Harrahs corny ways of trying to bring "neat" things to that property. Sorry but the Stripper pool party was a big reach Harrahs! All because they did not want to actually do it right - like Hard Rock, Tao, Wet Republic at MGM and Wynn.
How someone like Boyd would run an Alliante or GVR is a scary proposition.
stevem- You really don't get it, do you? The Sun can't lose money because of the JOA with the RJ.
another story of whoa......and everyone says the economy is getting better??
This is what many people call a "cherry picking" Chapter 11 Plan, where the current major players come in with "new money" and along with their mortgage lenders end up buying the company's best assets.
The dog assets and good but troubled assets are put up for auction and the creditors get whatever the bidders will pay, with the secured creditors getting paid first. In the alternative the most senior secured creditors decide they don't like the bids on the dogs and troubled assets, and the senior-most secured creditors end up owning the assets that the people bringing in the new cash don't want.
This proposed Chapter 11 Plan for Station Casinos is very similar to the successful cherry picking Chapter 11 Plan filed by Barclays Capital and supported by Lennar, with respect to the LandSource bankruptcy in Delaware. LandSource owned very choice real estate in California and Texas, and some doggy properties in Las Vegas, Reno, and California's "Inland Empire". Lennar started out owning only about 16% of LandSource, with California State Employees Retirement System (CALPERS) owning 68% and Cerberus owning the last 16% before the bankruptcy. Through that Chapter 11 Plan, Lennar came in with $140 Million in "new money" and ended up owning, outright, some of LandSource's best assets, and co-owning other good real estate with Barclays Capital and their successors. And all of the doggy real estate assets were sold to pay the millions of dollars in costs of the bankruptcy. Only the mechanics lien contractors were paid, and then only a fraction of what they were owed. The unsecured creditors, junior creditors, and LandSource's partners ended up with nothing next to nothing. The two other original owners CALPERS and Cerberus also got nothing, with the California State Employees Retirement System losing its $1+ Billion investment, which it had made less than 3 years earlier.
In the LandSource case, a Lennar affiliate also got a very sweet management contract for the assets it would co-own with its mortgage lender...just like we are reading in The Sun's story with respect to the Propco properties.
The sovereign wealth fund set up by the Emir of Dubai, which was 100% owner of John Laing Homes, also did a "cherry picking Chapter 11 Plan' with similar results in the John Laing Homes bankruptcy.
Among the interesting nuances in the Station Casinos case is that Mr. & Mrs. Frank Fertitta II owned the land under one of the casinos which the proposed Chapter 11 Plan says should be sold. I suppose Mama Fertitta will still get her rent checks as the landlord to the new buyer of the building sitting on her land.
It's going to be interesting to see whether this proposed Chapter 11 Plan for Station Casinos will be approved by the court, who will "win" and who, besides the junior and unsecured creditors, will be "hurt".
oh my god, logic_should_rule is so stupid. he's such an idiot that he doesn't understand what people post, so when HE tries to post in response to them...he doesn't even make sense.
the sun can't lose money?
what are you freaking talking about.
umm...look, brainchild...i know more about that JOA because i WORKED for the r-j and when i sold an ad into the r-j...it also ran in the sun.
the sun does in fact LOSE money.
remember when the sun USED to come in the afternoon?
now it's just a section of the r-j?
that's because...wait for it...i know you're stupid so...i'll talk real slow...that's because as the r-j's advertising slowed down, the sun also lost money and it was no longer profitable to send it out in the afternoon.
if the sun could truly never "lose" money...then it would still be coming in the afternoon.
idiot.
stevie-And you're calling me idiot? The Tucson Citizen is now a web site but Gannett still rakes in about $10 million from the JOA there.
So moron since you're the expert, how many millions does that little Sun insert cost?
And Mr.Doofus ad expert, you think ad revenues are higher in Tucson than Las Vegas?
stevem=moron, gosh what a compliment
Well, I say its JUSTICE, for them( STATIONS) .Anyone who outsorced the jobs they did, get what they deseve, and HARRY REID , is the leader of this kind of mess, along with the thing that calls herslef a woman in North Beach SF.(pole lowski) or what ever ,remeber to vote them both out and get AMERICA back where it belongs right HERE , thank you and good bye to Texas Station.....
The Fertittas will come out on top again. After pillaging the company for hundreds of millions of dollars, they wipe almost half the debt and buy back the best assets for pennies on the dollar. I cannot believe Colony is trading 76% of the company for 4%. What gives? And the bankers, holding 50% of the company, are willing to sell back to these crooks another 46% of the newly formed company for 85 million? And the newly formed company. Is this a set up to allow Stations to terminate all employees and rehire them at reduced wages and loss of seniority and benefits. A repeat of the Sante Fe calmity? They state they will give raises and reinstate the 401K. Lip service to get what they want and then once the contracts are signed they will renig, just as they have in past shady ventures. Shame on the creditors for giving in to these thieves.
Did anybody here ever think they'd see the day when the Fertitta brothers would be selling off their properties at fire sale prices?
I didn't.
Alarm bells should be going off in our heads. This is a signal that the entire economy of Las Vegas is on its last legs.
these casino it doesn't matter what casino they treat local like s***. no if and or buts about it.
Hopefully Propco brings back whipped cream to the breakfast buffet, and those canoe shaped waffles too !
you were saying the sun can't lose money because of the joa.
the sun "paper" CAN and DOES lose money. what part of that do you not understand?
the website is not part of the joa, fools.
JUST UNPACKED THE CAR FROM VEGAS. THE VENETIAN WAS SO CROWDED. THE VALET COULD NOT PARK OUR CAR LAST NIGHT. THE LOT WAS FULL. SLOT ATTENDANT STATED LAST NIGHT WAS JUST LIKE NEW YEARS EVE. NIGHT.TRIED FOR LUXURY SUITE AT PALLAZO. IT WAS BOOKED AND SAME AT WYNNS.
GVR would be a nice pick up for Boyd Gaming. They could rename it Sam's Town II. Set up an RV park, pump cigarette smoke into the casino, have lots of country music and NASCAR events...
I can't wait. Yee Haw.
Certainly a financial web that, in painfully classic form, demonstrates that from investors to employees and the public at large we all have a stake in the success or failure of our cities largest industry. Station's may not be the best managed company - I always thought they were respected - but this economy is humbling the best executives who must make hard decisions to save their companies. Now is the time for cool heads to prevail: Staff and management must work closer to control expenses and improve service levels while investors and bondholders must be realistic and flexible in their financial re-structuring. The public will do what it always does - vote with their pocket book.
"The assets to be sold include...key gaming-entitled sites in the Las Vegas Valley at Durango Road and the southern Las Vegas Beltway."
I live right there and was hoping to see construction on a new Durango Stations casino. Now it looks like more years of a massive empty lot.
How long am I stuck here?!!!
By Comment... with any luck, forever. You don't want a Station property in your backyard. Stations caters to the lowlife scum of society and noone wants that type in their neighborhood.
A couple of weeks late...thats called Hawaiian Time...having said that...didn't the Fertitta brothers edge their Father out of the company? and,is the father still among the living? Just curious.