Wednesday, May 5, 2010

Casinos: Station Gets a(nother) Lifeline

Well, so much for us knowing the final fate of Station Casinos sooner rather than later...

Station Casinos is getting a little extra time as the exclusive company or group to draw up a reorganization plan in its $6.6 billion bankruptcy case.

U.S. Bankruptcy Court Judge Gregg Zive gave the Las Vegas casino company until mid July to exclusively put forth a plan on how to emerge from its debt.

His approval came after creditors and independent lenders withdrew opposition to an extension. Attorneys for the groups initially wanted the exclusive right to draft a plan to end May 24 so they and others could prepare their own bankruptcy plan.

Zive had been leaning toward giving Stations the extension, saying, “I’m not sure why we should open the door to that type of distraction,” referring to others who might submit rival plans.

But issues remain over Station's proposed auction and PropCo/OpCo divide.

Deutsche Bank and JP Morgan hold a $2.475 billion mortgage on four of Station’s most valuable properties: Red Rock Resort, Sunset Station, Boulder Station and Palace Station. They and Station Executives Frank and Lorenzo Fertitta would take over those four casinos.

Another 13 casinos would be put up at an auction.

The Fertittas and the banks have put together a proposal to bid $772 million for those 13 casinos. But other companies could outbid them.

The judge also allowed the lenders and creditors additional time to take depositions from two more officials. Zive will hear additional arguments Wednesday on the bidding procedures but said he won’t rule until later hearings set for May 26-27 in Reno.

Lawyers for Station Casinos objected to allowing more depositions. Thomas Kreller, attorney for Station Casinos, said it gave the bondholders, creditors and lenders 50 reports and allowed them to take depositions from five officials.

But lawyers for the creditors and others told Zive they have not been able to get all the necessary information to assess the proposed reorganization plan. They argued that they need to know how the “stalking horse” plan was selected and want to know the value of such things as customer lists and land.

“There is no evidence on the value of the excluded assets,” said Eric Winston, attorney for the creditors’ community.

And apparently there is also an emerging problem with Texas Station, as the Fertittas want to auction off the casino but NOT the land underneath it. So this ain't over yet, not by a longshot.

So far, it seems Station has been lucking out in getting the judge to mostly agree to what the Fertittas, Colony Capital, Deutsche Bank, and JP Morgan Chase want. We'll have to see if their luck will ever run dry in this case.

I just wonder how much of a chance Boyd really has now in getting any of these casinos...

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