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Arnold M. Knightly


Station Casinos granted extension

3 Mar 2009

By Arnold M. Knightly

LAS VEGAS, Nevada -- Station Casinos' bankruptcy plans have been put on hold — for now.

The locals casino company and debt holders reached an agreement that will give the gaming company another five weeks to negotiate a restructuring plan under terms of agreements scheduled to be released early today.

The terms of the agreements, called a forbearance agreement, with holders controlling the company's $5.4 billion debt will be released to the Securities and Exchange Commission when markets open about 6 a.m. local time.

The announcement comes hours after a midnight Monday deadline passed for bondholders controlling $2.3 billion in notes to vote on a proposed restructuring that would have seen them recover between 10 cents and 50 cents on the dollar in new notes and cash.

Trading on the senior notes was at 31 cents on the dollar Monday, while subordinate notes were valued at 3 cents on the dollar, data from the National Association of Securities Data show.

The voting deadline was extended until April 10 at 5 p.m. EST, and the terms of the forbearance agreement expire April 15.

The original plan, announced Feb. 2, would have seen the company enter into a voluntary Chapter 11 bankruptcy and the gaming company's owners — the Fertitta family and real estate investment firm Colony Capital — infusing $244 million in cash into the company as part of the restructuring plan.

Station Casinos said the agreements "will provide the company with additional time to continue discussions regarding terms of its plan of reorganization," according to a statement embargoed until early today.

An earlier debt exchange, which offered between 20 cents and 54 cents on the dollar in new bonds and 3 cents on the dollar in cash for senior lenders, was rejected by bondholders in November.

That proposal did not include any kind of cash infusion by the company's owners.

The agreement states that bondholders will not claim defaults on two skipped debt payments scheduled to expire this month: a $14.6 million payment due today and a $15.5 million debt payment expiring March 17.

The agreement does not discuss a $950 million offer made Feb. 23 by Boyd Gaming Corp. for a majority of Station Casinos' operations. Debt analysts valued Boyd Gaming's offer a better deal for bondholders, meaning Station Casinos might be forced to increase its offer.

The company has been struggling to pay expenses incurred by its $8.8 billion takeover by the Fertitta family and Colony Capital in November 2007. Since then, the economy has soured, and the revenues of Station Casinos and other gaming companies have tumbled as consumers curbed spending.

Primm operator Herbst Gaming and Black Gaming, which owns three casinos in Mesquite, have been working under forbearance agreements since late last year.

Station Casinos, which has not released its year-end earnings, said Feb. 2 it had $350 million in cash to service operations and fund operations.

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