Station Casinos’ proposed plan to reorganize the company and emerge from bankruptcy has run into a few roadblocks and is not likely to be resolved any time soon. Some of the company’s creditors and Boyd Gaming have filed objections to the company’s two-pronged plan.
Here’s a quick refresher on what the Fertitta group has proposed:
Step one: The two banks holding the mortgages on Red Rock, Sunset, Boulder and Palace will foreclose on those properties. The banks, the Fertittas and Colony Capital will then form a new company to own those casinos, the Wild Wild West property and vacant land on Cactus Avenue. The Fertittas will pay $85.6 million and Colony will pay a much smaller amount for a combined 50 percent ownership stake in the new company. The banks will own the other 50 percent. The new company will still be highly leveraged with $1.85 billion in debt.
Step two: The company’s remaining assets, including the remaining 13 casinos, land holdings, and management contracts, will be sold in a bankruptcy auction. Station, Colony and the two banks, through their new company, want to be the “stalking horse bidder”, which essentially means they would have the opening bid and establish the minimum amount it will take to buy the remainder of the company. They’ve proposed a stalking horse bid of $772 million, which is below the $950 million Boyd offered for most of those assets last year.
Station’s needs the bankruptcy judge and its remaining creditors to approve the deal.
Two groups of creditors and Boyd Gaming have filed objections to Station’s reorganization plan. According to a recent article in the Las Vegas Sun called “Creditors attack Station Casinos bankruptcy plan”, one group of creditors owed $2.5 billion claims the company’s stalking horse bid proposal “…is the latest component of an overall scheme to ensure that the Fertittas retain control of the Station enterprise, at as low a valuation as they can get away with.”
Boyd has also weighed in and said it is still interested in buying some or all of Station’s assets. Last December, Boyd offered to buy the whole company for $2.45 billion.
Clearly, there is still a rocky road ahead for the Fertittas as they try to retain some control of the company. At this point there is no guarantee their current proposed plan will be accepted or that they will be the only, much less the winning, bidder in an auction for a chunk of the company’s assets.