Station Casinos, an owner of 18 casinos including Red Rock and the new Aliante Station, both in Las Vegas, said Wednesday that it has offered to pay investors 10- to 50 cents on the dollar in secured notes and cash in exchange for some $2.3 billion of existing bonds. Affiliates of the Fertitta family and Colony Capital have agreed to put up as much as $244 million in new capital to maintain their current interests in the company, according to Station Casinos.

Station says its equity sponsors and lead senior secured lenders have already agreed to support and it is now seeking favorable votes from its bondholders, who would be most affected by the proposal. If enough bondholders support the proposal--two-thirds of senior note holders and two-thirds of subordinated note holders must agree with the plan before it is filed--the company said it may file for Ch. 11 bankruptcy.

Stations previously offered up a debt-exchange offer for some of its senior notes but canceled those plans in December after investors reportedly balked at accepting a cash payment for less than face value or new, discounted notes with longer maturities. Earlier this week, the company said that based on current operating estimates for the fourth quarter it expects to be unable to maintain compliance under its maximum total debt to Adjusted EBITDA ratio as defined in its credit agreement. Also, citing the proposed restructuring, Station Casinos then opted not to make a scheduled $14.6 million bond interest payment.

The Fertittas and Colony Capital paid $5.4 billion or $90 per share for Station Casinos and assumed an additional 3.3 billion in debt. The debt financing commitments were made by affiliates of Deutsche Bank AG and JPMorgan Chase & Co.

Station had $5.35 billion in long-term debt as of Sept. 30, according to a regulatory filing. The company says the proposal as offered would reduce its unsecured debt by approximately $1.9 billion, all at the expense of bondholders, and reduce its interest payments by more than $100 million.

Members of the Fertitta family that would be participating in the $244-million additional capital contribution include Frank J. Fertitta III, Station Casinos' chairman and chief executive, and vice chairman Lorenzo J. Fertitta. "We believe the proposed restructuring plan is in the best interest of all of our constituents, said Frank Fertitta in a prepared statement.

"If we are unable to successfully implement a debt restructuring program, we would need to obtain waivers or amendments under our Credit Agreement," the company states. "If we are unable to obtain waivers or amendments if and when necessary, we would be in default under our Credit Agreement, which would trigger a cross-default under the Aliante Financing."

Late last year, Harrah's Entertainment, was able to swap $2.22 billion in bonds for new notes with higher interest rates and later maturities and, for those who request, cash payments of 60 cents for each $1,000 of new notes that it opted not to receive for older notes. That company was taken private in January 2008 by Apollo Management LP and TPG Inc., which assumed $13.4 billion of debt as part of its $30.7 billion purchase.

In addition to the proposed bankruptcy, Station Casinos revealed Wednesday that the preliminary expectation for $290 million in revenue, a 19% decline from the same 2007 period. Its operating loss is expected to come in at $2 million, which compares to operating losses of $377 million (including one-time charges) for the same 2007 period.