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.