Facebook
Fark
Digg
Reddit
Stumblegaming:
Lawyers question Station officials, try to show reorganization plan unfair
Wednesday, May 5, 2010 | 7:48 p.m.
Sun archives
- Station Casinos gets extension on sole right to draft bankruptcy plan (5-4-2010)
- Locals casino investors show interest in Station Casinos assets (5-4-2010)
- Station Casinos: No competitive advantage under bankruptcy plan (4-29-2010)
- Station Casinos: Boyd Gaming meddling in bankruptcy case (4-28-2010)
- Boyd Gaming objects to Station Casinos reorganization plan (4-22-2010)
- Union-backed group critical of Station reorganization plan (4-21-2010)
- Creditors attack Station Casinos bankruptcy plan (4-21-2010)
- Key lenders agree to Station Casinos reorganization plan (4-19-2010)
- Station Casinos asks judge for extension in bankruptcy case (4-8-2010)
- Station Casinos reports revenue drop in fourth quarter (3-31-2010)
- Station Casinos reorganization plan: Sell several properties (2-25-2010)
- 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)
CARSON CITY — If the reorganization plan for bankrupt Station Casinos Inc. is approved and carried out, senior executives will be free to jump ship.
And at a hearing in bankruptcy court in Reno, it was revealed that the Wild Wild West hotel-casino was a money loser.
Attorneys for the creditors conducted exhaustive cross-examinations Wednesday of company officials, trying to show that the proposed reorganization and bidding plan was unfair.
U.S. Bankruptcy Court Judge Gregg Zive withheld a ruling until hearing final arguments on May 27-28.
Thomas Friel, an officer in Station Casinos, said if the bankruptcy plan is completed, the non-competition restriction in hiring between the various casinos would be lifted. He suggested it would create a “jump ball” scenario.
Zive characterized it as the executives being “free agents.”
The reorganization plan splits the casino company into two organizations. Friel said the executives in the 13-casino group would be free to join the company to be run by the Fertitta brothers, Colony Capital, Deutsche Bank and JPMorgan that would control five casinos.
Deutsche Bank and JPMorgan hold a $2.475 billion mortgage to four of Station’s most valuable properties. They would have Frank and Lorenzo Fertitta manage the casinos, and the brothers would buy in for a share.
Friel, under cross examination by attorney Eric Goldberg, testified the Wild Wild West has generated a negative cash flow of $1.6 million a year and has no value in assets.
He was asked why the Fertitta-bank group would want the casino. Friel said Deutsche Bank and JPMorgan own property surrounding the casino and the property could be developed, but it “will be a long time away.”
Thomas Kreller, attorney for the Fertitta-bank group, told the judge the bidding procedure was fair and aimed at generating the maximum price.
The Fertitta group would retain five PropCo properties — Red Rock Resort, Sunset Station, Boulder Station, Palace Station and the Wild Wild West.
The 13 other properties would be auctioned off by the bankruptcy court, with the money raised paying some of the claims of creditors. The Fertitta-bank group would submit a base bid of $772 million for the 13 casinos.
A competitor would have to bid at least $789.5 million to be successful.
The attorneys for the creditors concentrated their questions on the “excluded assets” not on the auction block. If PropCo won the bid at $772 million, it would get the “excluded assets” at no extra cost.
If another bidder captured the 13 casinos, PropCo would pay $35 million for these “excluded assets.”
The “excluded assets” include a primary customer database, trademark rights, IT systems, furniture and the pattern rights for the single slot machine card now used in all casinos.
Friel said the Fertitta group tried to buy the customer database system but the deal fell through.
Attorneys for the creditors suggested these “excluded assets were worth more than $35 million, and one estimate was they may be worth $65 million.
The lawyers suggested several times that the whole company should be put on the auction block to see how much it would bring. Unsecured creditors including bondholders are owed $2.5 billion.
Discussion: comments so far…
Comments are moderated by Las Vegas Sun editors. Our goal is not to limit the discussion, but rather to elevate it. Comments should be relevant and contain no abusive language. Comments that are off-topic, vulgar, profane or include personal attacks will be removed. Full comments policy. Additionally, we now display comments from trusted commenters by default. Those wishing to become a trusted commenter need to verify their identity or sign in with Facebook Connect to tie their Facebook account to their Las Vegas Sun account. For more on this change, read our story about how it works and why we did it.
Only trusted comments are displayed on this page. Untrusted comments have expired from this story.
No trusted comments have been posted.
Post a comment
Most Popular
- Viewed
- Discussed
- E-mailed
- Superstar Whitney Houston dies at 48
- Two dead after accident in downtown Las Vegas
- Instant Analysis: Debating whether UNLV should continue series with San Diego State
- Dining Guide: 2012 Valentine’s Day options in Las Vegas
- Color from the scene at Thomas & Mack Center: We have a wire job! Rebels win, and Louie Armstrong sings!
- UNLV can move forward without the burden of losing streak to San Diego State
- Four people injured in car accident
- Blog: Justin Hawkins’ steal seals UNLV’s thrilling 65-63 victory against San Diego State
- UNLV makes key plays down stretch to hold off San Diego State 65-63
- A wife’s wisdom shows birth control issue needn’t be divisive
Blogs
The Kats Report
Color from scene at Thomas & Mack: We have a wire job! Rebels win, and Louie Armstrong sings!
South Point owner Michael Gaughan's take on 'Vegas Stripped': 'I'll give it an 8' (4 Comments)
Author relishes writing the life story of ‘larger-than-life’ Oscar Goodman (3 Comments)
Elsewhere
Landowner: All roads could lead to Uxbridge casino
Revel reveals smoke-free casino opening
Cirque du Soleil show in Sands China casino to close this month
Meet the woman behind Sheldon Adelson
The Sun
Locally owned and independent for more than 50 years.
Wow! Before I read this article, I thought the Wild, Wild, West was a cash cow. I'm shocked!
Where does the Grenspun family (owners of the SUN) come out in this deal? Are they in favor or against?
The entire empire should go up on the auction block as mentioned above, Forget about giving the Fertitta thieves anything.
The customer database is what is valuable. They should copy it 18 times with each property getting its own copy. That should add value to auctioning them off seperately. I bet you Harrah's, MGM, Sands, etc.. would come up with money for each to buy at least one property in order to own the database. An we know Boyd would want to get the vast majority.
Creating demand would increase the price for Station's properties and give the highest value for the bondholders.
I heard that once the bankruptcy is decided upon, the new gaming company will be a joint venture with KFC,The Gillette Corporation and Fertitta Gaming. It will be called 'THE CHICKEN SCHICK CASINO.'
Ha Ha Ha skerlahdee my thoughts exactly!