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Arnold M. Knightly

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Station Casinos seek deal with bondholders

4 Feb 2009

By Arnold M. Knightly

LAS VEGAS, Nevada -- Station Casinos will ask bondholders to approve a prepackaged restructuring plan that could see the company emerge from Chapter 11 bankruptcy by the summer, the locals gaming company announced late today.

If the bondholders approve the plan, Las Vegas-based gaming company's owners, the Fertittas and private real estate investment firm Colony Capital, said they will put up to $244 million in cash into the company to increase the company's liquidity and reduce its debt load.

"We believe the proposed restructuring plan is in the best interest of all our constituents," Chairman and Chief Executive Officer Frank Fertitta III said in a statement.

Station Casinos also announced in the release that it did not make a $14.6 million interest payment that was due Monday on a $450 million note that matures in 2014.

The company is soliciting support from its bondholders, which hold nearly $2.3 billion of the company's $5.4 billion debt load, before beginning a voluntary bankruptcy, according to the release.

The company will need approval from two-thirds of the senior note holders and two-thirds of the subordinate note holders so it can submit its restructuring plan to bankruptcy court.

Under Station's proposal, the senior bondholders would receive 50 cents on the dollar while subordinate bondholders would get 7 cents on the dollar in new notes and 3 cents on the dollar in cash.

The notes were trading today as low as 12 cents and 2 cents, respectively.

The remainder of the company's debt is held by banks, which have agreed to Station's restructuring plan. Terms of those agreements, however, were not available.

Bondholders will have until midnight EST March 2 to vote on the proposal, according to the release.

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