In early September, some of Station Casinos' minority lenders filed a motion to have an independent examiner appointed to investigate the decisions being made by Station management and its main lender, Deutsche Bank, due to alleged conflicts of interest. Station objected to the motion toward the end of the month, denying any conflict of interest and calling the motion an "unfortunate and ill-considered" distraction by "admittedly over-secured" lenders meant to bolster their negotiating position, and in early October Station filed a motion seeking an extension of its exclusivity period, a 120-day window during which only it can file a reorganization plan.

In its filing Sunday, Boyd Gaming said any such an extension should be subject to conditions that would allow competing plans to be developed during the time and ultimately considered at the end of the exclusivity period. "At the end of the process chosen by the debtors, any proposal by the debtors should be tested against alternatives, such as sales, that may be superior and in the best interest of creditors as a whole," Boyd states in its filing. "Since the debtors have shown little interest in developing alternatives with potential buyers like Boyd, an examiner appears to be the logical intermediary between the reluctant debtors and motivated buyers."

In asking for an independent examiner, the minority lenders allege that the "stacked" corporate structure created to take Station Casinos private in 2007 is no longer viable because the common management cannot act in the best interest of the OpCo, PropCo and LandCo entities at the same time when each is bankrupt and has separate debt obligations. The minority lenders says Deutsche Bank, the main lender, is in the same position as the common management due to it being not only the agent for a $900-million secured "OpCo" parent company loan agreement that includes the independent lenders but also a major lender for both the separate $2.475 billion "PropCo" loan covering four of Station's 18 casino properties and a separate $250 million "LandCo" loan.

Among many other things, the minority lenders cite as reason for an independent examiner Station Casinos' management's continued rejection of Boyd Gaming's expressions of interest even after its argument for the rejection--that a pre-packaged bankruptcy would be better--was made a moot point when it didn't occur. For previous stories on Station Casinos and Boyd, click on one of the following headlines:

Instant Insights /

Boyd Wants Competing Plans for Station Casinos

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