BANKRUPTCY HEARING: Station gets extension - Business

PRINT THIS Popular

Nov. 21, 2009
Copyright © Las Vegas Review-Journal

BANKRUPTCY HEARING: Station gets extension

Judge to hear arguments on lease agreement; Boyd request rejected

By ARNOLD M. KNIGHTLY
LAS VEGAS REVIEW-JOURNAL

A bankruptcy judge Friday temporarily extended the exclusivity period for Station Casino to submit its own restructuring plan until he can hear arguments on modifying a key lease agreement that some creditors oppose.

The deadline would have been this month under Chapter 11 rules, which give debtors 120 days after filing to submit a plan. After 120 days, any interested party can submit a reorganization plan to the court.

Most Popular Stories

REAL ESTATE: Housing analyst predicts increase in sales, median price in the coming year

SOUTHERN NEVADA ECONOMY: Survey says recession's worst has passed for Las Vegas

Blue Heron remains aloft with custom features

Rental housing prices down 8.2 percent in Las Vegas

UFC investment won't be used to help bail out Station Casinos, owners say

Penn National maintains interest in Strip property

INSIDE GAMING: 'Total nonsense' makes a lot of sense

SOUTHERN NEVADA ECONOMY: Holding off on hiring

Harrah's gets preliminary approval to acquire Planet Hollywood

NEVADAN AT WORK: By delivering on promises, homebuilder succeeds

Bankruptcy Judge Gregg Zive also rejected Boyd Gaming Corp.'s request to participate in Friday's hearing on appointing an examiner, because the request was made too late. He also questioned Boyd's standing in the case.

Boyd Gaming, which offered $950 million for some or all of Station's assets, revealed Friday that it has acquired approximately $2 million in senior unsecured bonds since March, the company's attorney said.

Zive delayed making a final decision on granting Station more time to file its reorganization plan so he can hear arguments Dec. 7 and Dec. 11. Those hearings will address a proposal by Station that would lower the $250 million in annual lease payments it is paying a subsidiary that controls four hotel-casinos.

A group of independent lenders, along with a group of unsecured creditors, contend the $250 million lease should be reworked or recharacterized as an unsecured claim in court.

As part of Station Casinos' 2007 buyout, the company agreed to lease four casinos -- Red Rock Resort, Sunset Station, Palace Station and Boulder Station -- for $250 million per year from a subsidiary holding $2.5 billion in debt collateralized against the properties. Before the bankruptcy filing, part of the $250 million payment was used to pay debt, with the excess cash returning to the parent company.

The bankruptcy filing prevented the excess cash from being returned to Station, spurring unsecured creditors and independent lenders to argue that the payments are shifting value from the parent company to the subsidiary.

The proposed agreement, which has not been reviewed by creditors, would reduce the monthly payment for three months beginning in December from $21.45 million to an estimated $13.8 million -- an amount equal to the four properties' cash flow, minus $1.6 million for capital expenditures.

The agreement was proposed after creditors informed Station in October that continued payments of the lease would not be approved under current cash collateral agreements.

That means Station will need to either refuse to pay when the next payment is due in December, or pay and go to court with the lenders. Failure to pay could cause the properties to be taken over by creditors.

Independent lenders who had been seeking an examiner to review the buyout and Station Casinos' rejection of Boyd's offer withdrew their request after Zive refused to let Boyd participate in the hearing.

Thomas Keller, a Los Angeles-based attorney representing Station, said the lenders had reached an agreement giving them a seat at the negotiating table.

As part of the agreement, Station will hold biweekly status meetings or conference calls with lenders, provide them with updates and financial reporting at the same time information is given to the lead lender. Kreller said Station Casinos will also forward information about any offer Boyd makes to the lenders.

Late Friday, Boyd Gaming officials said they were still interested in acquiring assets of Station Casinos and that they looked forward to the Dec. 11 hearing.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.

Share & Save

Leave Your Comment	6 Reader Comments
Terms & Conditions The following comments are provided by readers and are the sole responsiblity of the authors. The reviewjournal.com does not review comments before publication nor guarantee their accuracy. By publishing a comment here you agree to abide by the comment policy. If you see a comment that violates the policy, please notify the web editor. Some comments may not display immediately due to an automatic filter. These comments will be reviewed within 48 hours. Please do not submit a comment more than once.
Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. bigd wrote on November 22, 2009 06:06 PM: Was there ever a doubt about an extension, you could have given big odds that there would be an extension. As for scrutiny mentioned in another comment, this should have happened some 20 plus years ago, like deep,deep scrutiny. ex gambler wrote on November 22, 2009 12:51 PM: It appears, the Fertittas have been granted many immunities and entitlements, not accustomed to those without their connections. Since their release from prison, it's heavily rumored that Faraci and Rizzolo are back in the strip club business along with another Crazy Horse Too convicted felon named Al Rapuano (walking behind Rizzolo in this AmericanMafia.com photo by Mike Christ). Faraci at Eden; Rizzolo and his family at Bada Bing; and Rapuano at Penthouse -- three clubs located in the county, two on land owned by the Fertitta family of Station Casinos fame. The Fertittas proudly attended Rick Rizzolo's welcome home party on April 4, the day he was released from custody, even though Nevada law prohibits unlimited gaming license holders from associating with ex-felons. Ted Binion lost his gaming license at the Horseshoe because of his relationship with Herb Blitzstein, and Frank Sinatra lost his gaming license at Cal Neva Lodge because of his relationship with Sam Giancana. But the same gaming enforcement rules no longer seem to apply to the Fertitta family in this new Las Vegas. This family seems to be immune to scrutiny even though they unabashedly associate with guys who rightfully belong in our state's infamous Black Book of persons excluded from entering casinos. http://www.americanmafia.com/Inside_Vegas/5-12-08_Inside_Vegas.html casinocon wrote on November 21, 2009 01:02 PM: Those biweekly status meetings should be a real hoot - "locals aren't gambling", "locals still aren't gambling", "our customer base is still slipping", "we've tried every cockamaney rigged drawing promotion to get gamblers to return, but they are wise to us," "we keep losing money," . . . you reap what you sow, boys! ex gambler wrote on November 21, 2009 10:55 AM: Amazing what a few connections will get you... http://www.americanmafia.com/inside_vegas/12-5-05_Inside_Vegas.html David wrote on November 21, 2009 10:35 AM: Sounds like Stations has paid a nice commission to the 'Honorable' judge. out of town wrote on November 21, 2009 08:34 AM: And they say the mob doesn't control Vegas anymore. What three sticks wants three sticks gets.....