Station Casinos Files for Ch. 11 Bankruptcy

Per an agreement with its senior secured lenders, none of the company's casino operating subsidiaries were included in the filings. The company, whose assets are otherwise nominal, says operations will continue unabated under existing management and no jobs will be lost. As of July, the company had approximately 14,000 employees.

Affected like the rest of the gaming industry by the recession, which has hurt tourism and related spending, the locally headquartered operator of more than a dozen off-Strip casinos here hasn't been making interest payments on its debt and had been seeking another forbearance agreement to complement one that had already expired while it awaited word on whether bondholders are amenable to the pre-packaged bankruptcy plan it filed in February.

No deal has been reached with bondholders, but a majority of lenders under its senior secured credit facility have agreed not to exercise their default related remedies until a plan of reorganization is in place or Jan. 31, 2010--whichever comes first--and to provide up to $150 million in new debt. The bankruptcy filing, which it said in February was a real possibility, may be seen as a way to resolve any remaining issues with bondholders. Station Casinos EVP Thomas Friel was not immediately available Wednesday morning for comment.

"The restructuring of our debt will provide us with the financial flexibility necessary to meet the challenges of the current economic environment," Station chairman/CEO Frank Fertitta says in a prepared statement. "Equally important, it will provide the resources necessary for us to continue to invest in our properties, take advantage of opportunities as they arise and ultimately enable us to emerge as a stronger company."

The company filed Chapter 11 on behalf of 17 affiliates. These cases are being jointly administered under the caption Northern NV Acquisitions LLC, et al Debtors. The affiliates are as follows: FCP Holding Inc.; FCP VoteCo LLC; Fertitta Partners LLC; FCP MezzCo Parent LLC; FCP MezzCo Parent Sub LLC; FCP MezzCo Borrower VII LLC; FCP MezzCo Borrower VI LLC; FCP MezzCo Borrower V LLC; FCP MezzCo Borrower IV LLC; FCP MezzCo Borrower III LLC; FCP MezzCo Borrower II LLC; FCP MezzCo Borrower I LLC; FCP PropCo LLC; Northern NV Acquisitions LLC; Tropicana Station LLC; River Central LLC; and Reno Land Holdings LLC.

The pre-packaged bankruptcy was offered up in February by Station Casinos and some of its lenders. It would pay investors 10 cents to 50 cents on the dollar in secured notes and cash in exchange for some $2.3 billion of existing bonds. Affiliates of the ownership, 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.

Also in February, Boyd Gaming made a non-binding $950-million offer for several of Station's casino properties, saying it "would present a superior recovery to the unsecured creditors of Station versus the current Exchange Offer." On March 2, concurrent with receiving the first of many forbearance agreements, Station Casinos shot down the offer.

The company lost $33.7 million in the first quarter, less than half of what it lost in the same year-earlier period, due mostly to a $40.3-million gain on the early retirement of debt, not improved property performance. Average occupancy fell 300 basis points year-over-year to 85% while the average daily room rate fell 26% to $71 from $98. Net revenue fell 20% to $282.7 million. Revenue from gaming, hotel rooms, and food and beverage sales all declined, according to the SEC filing. Operating revenue fell by more than half, to $27.7 million from $59.9 million.