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LAS VEGAS-Station Casinos Inc. on Thursday reported a first quarter loss of $33.7 million, less than half of what it lost in the same year earlier period. The improved performance was related to lower operating expenses and 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.

The locally headquartered operator of off-Strip casinos hasn’t been making interest payments on its debt and is currently surviving on a forbearance agreement that was recently extended from April 15 to May 15. Had it not received the extension it would have filed for protection from creditors under Ch. 11 of the US Bankruptcy Code. The company reportedly revealed the plans last month in response to a request for an injunction against a possible filing.

In February, Station Casinos and some of its lenders offered up a prepackaged bankruptcy proposal that would 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. That deal is still in the works.

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 a forbearance agreement, Station Casinos shot down the offer.

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