Major Debt Causes Station Casinos to File for Chapter 11

by Leland Roling on Jul 29, 2009 9:45 AM EDT

The Wall Street Journal has a story regarding the Fertitta-owned Station Casinos filing for Chapter 11 bankruptcy protection to restructure roughly $5.7 billion dollars in debt:

Despite months of haggling, the company failed to reach a prearranged agreement with all its lenders. Bondholders control $2.3 billion of the company's $5.7 billion in debt.

The company's 18 casinos are separate entities wholly owned by Station and aren't part of the bankruptcy filing. They will continue to operate as usual, a Station official said. All of the debt is held by the parent company.

However, senior secured lenders did agree to allow the parent company to borrow up to $150 million from its noncasino subsidiaries, according to a filing with the Securities and Exchange Commission.

The lack of an accord with bondholders could mean a long haul in bankruptcy court. But "all the lenders are on board" with the move to file, said Station Chief Accounting Officer Tom Friel.

Lorenzo Fertitta is no longer the acting President of Station Casinos since June 19th, 2008 in which he stepped down to focus solely on helping Zuffa succeed. We've heard some quotes in interviews regarding Lorenzo's activities in the international scene in helping the UFC gain television deals in other countries to expand their brand.

Frank Fertitta III is, however, still the CEO of Station Casino, and the family fortune will most likely take a hit in this instance. Don't feel too bad for the Fertittas though. Lorenzo and Frank have plenty of other opportunities to continue their run on the billionaire's list, and Station Casinos could very well come out of the Chapter 11 at some point and make huge money once again. Oh, and there is also the potential that the UFC is heading to primetime network television. That'll only bring in more dollars for Zuffa.

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important topic Leland

MMA writers have been kind of sleeping on this story, but its a big deal and had something like this happened in the early years of the Zuffa era, the UFC would likely have been sucked under too.

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by Nate Wilcox on Jul 29, 2009 10:12 AM EDT reply actions

It’s very interesting to read some of the things going on underneath the hood. They were supposed to file by April 15th, but stakeholders argued over what the company should do for quite some time. Restructuring 5.7 billion in debt will be tough, and having all these casinos off the strip in a down economy surely can’t help. Guess we’ll see what happens.

Good thing is… Fertittas have always been good about keeping assetts in shell companies and other things, so I doubt they’ll personally take huge hits from money they’ve already acquired. Just actual stock options within Station Casinos.

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by Leland Roling on Jul 29, 2009 10:16 AM EDT up reply actions

No doubt the Fertittas are well versed and well advised at playing the shell game of asset management (for evidence of this see how the parent company of a casino operator files Chap. 11, yet the casinos are ostensibly not affected) but eventually, all roads lead to Rome.

Leland, where did they file? Nevada? I have PACER access. Let me know if you want to pair up and do a little digging. Although the WSJ already had it this morning, I doubt there are many rocks not kicked over yet.

Although detractors decry (MMA) as a brutal, bloody form of human cockfighting, aficionados know it is a brutal, bloody, totally fucking awesome form of human cockfighting. -The Onion

by The Kittitas Kid on Jul 29, 2009 11:38 AM EDT up reply actions

Not sure, try checking it out through PACER. Probably Nevada.

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"Two things are infinite: the universe and human stupidity; and I’m not sure about the universe." - Albert Einstein

by Leland Roling on Jul 29, 2009 11:42 AM EDT up reply actions

United States Bankruptcy Court for the District of Nevada in Reno

Hold on.

Although detractors decry (MMA) as a brutal, bloody form of human cockfighting, aficionados know it is a brutal, bloody, totally fucking awesome form of human cockfighting. -The Onion

by The Kittitas Kid on Jul 29, 2009 11:51 AM EDT up reply actions

Not much there. Just the voluntary petition.

Total assets $5.73 billion. Total debts $6.48 billion. Unsecured debt $4.38 billion. Major creditors: Law Debenture Trust Co., Fidelity Management & Research, Goldman Sachs … Etc., etc.

Although detractors decry (MMA) as a brutal, bloody form of human cockfighting, aficionados know it is a brutal, bloody, totally fucking awesome form of human cockfighting. -The Onion

by The Kittitas Kid on Jul 29, 2009 11:59 AM EDT up reply actions

It's only the weak credit market that makes this a real story.

Anyone filing for Chapter 11 protection right now will struggle a little bit to find DIP financing.

Restructuring debt is a fairly normal procedure; I wouldn’t expect the family fortune to suffer much at all.

I like using semi-colons; they make me feel smart.

by Llewdor on Jul 29, 2009 1:07 PM EDT reply actions

Well, the real issue is that the Las Vegas area is one of the heaviest hit by foreclosure, and most people going to the Station Casinos, since they are off the strip, are locals. That’s why they are one of the first to file, but many of the others are following.

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"Two things are infinite: the universe and human stupidity; and I’m not sure about the universe." - Albert Einstein

by Leland Roling on Jul 29, 2009 1:21 PM EDT up reply actions

It’s interesting that the casinos are separate from this as that really is where Station’s real assets and earnings are. I imagine that in the end we won’t see much of a change in the Fertitta’s due to this and Station should come out of this much stronger than they are now (which is the point of chapter 11). Of course if they can’t restructure and get pushed into a chapter 7 this will be a huge story.

by who me on Jul 29, 2009 6:20 PM EDT reply actions