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Bankrupt Station Casinos Says Creditors Have Ended Reorganization Fight
Station Casinos Inc., the biggest U.S. gambling company in bankruptcy, settled its dispute with unsecured creditors, opening the way for Chairman Frank Fertitta and his brother to try to retain control of the company.
The settlement gives equity warrants to bondholders and other unsecured creditors who had opposed letting Fertitta and his brother, Vice Chairman, Lorenzo Fertitta, keep an ownership stake. Certain bondholders agreed to invest as much as $100 million for a 15 percent of the new company coming out of the bankruptcy, said Marc Falcone, Chief Financial Officer of Fertitta Gaming LLC.
“We are extremely pleased to have reached an agreement with the unsecured creditors’ committee,” Falcone said in a statement today after Station filed its documents in U.S. Bankruptcy Court in Reno, Nevada.
The unsecured creditors, owed $2.8 billion, had opposed the Las Vegas-based company’s bankruptcy exit plan. Under the earlier proposal, Station would be broken into two parts, both of which would be taken over and reassembled by a partnership led by the Fertittas.
Today’s settlement, which must still win the judge’s approval, will give the unsecured creditors warrants to purchase equity in the new company that will control Stations Casinos.
That company will also be owned by the Fertittas and Stations lenders. Tom Barrack’s Colony Capital LLC has an option to purchase part of the company.
Fertittas’ Investment
Station’s reorganization requires the Fertittas to invest $85 million to purchase as much as a 50 percent stake in a holding company that will own the four most valuable casinos: Red Rock, Palace Station, Boulder Station and Sunset Station. Together those casinos bring more than half of Station’s revenue. Company lenders will own a stake in the holding company and also be owed $1.6 billion under a new credit facility, according to court documents.
Most of the remaining 14 Station-affiliated casinos would be sold at an auction next month in which a Fertitta partnership would act as the lead bidder with an offer worth $772 million.
Complete financial details of the settlement between unsecured creditors and Station had not yet been filed with the court early Wednesday evening.
The case is In re Station Casinos Inc., 09-52477, U.S. Bankruptcy Court, District of Nevada (Reno).
To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net.
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