Boyd Gaming Corp. of Las Vegas stepped up its campaign over the weekend to buy some or all of the assets of bankrupt competitor Station Casinos Inc.
In a rare Sunday court filing, Boyd said it supports a motion by a minority group of lenders that an examiner be appointed to study Station's finances.
Station, taken private by members of the founding Fertitta family and Colony Capital of Los Angeles in 2007, filed for bankruptcy protection in July after the recession reduced revenue at its hotel-casinos and it was unable to service its debt -- last reported at $6.49 billion.
The Las Vegas company has been resisting the request by the group of minority lenders that an examiner be appointed to look into how the 2007 deal affects creditors today. Bankruptcy Judge Gregg Zive has already approved a request by the case's Official Committee of Unsecured Creditors to hire a law firm to investigate that and other issues.
With Station earlier this year rejecting Boyd's offer to buy certain Station assets, Boyd said in its Sunday filing: "Since the debtors have shown little interest in developing alternatives with potential buyers like Boyd, an examiner appears to be the logical intermediary between the reluctant debtors and motivated buyers."
Station Casinos officials on Sunday said they had no comment on Boyd's filing.
Boyd didn't say why it filed the motion on Sunday -- well ahead of a Nov. 20 hearing on the issue. Boyd appears to be signaling that it's going to be a player to be reckoned with as key issues are considered in Station's case.
Boyd, in reporting earnings last week, strongly affirmed its interest in buying some or all of Station's assets and reiterated that it's in good financial shape with the ability to finance such a deal.
Such a transaction, if approved by regulators, could involve up to 18 Station properties in Las Vegas and would complement Boyd's stable of mostly suburban Las Vegas hotel-casinos: Sam's Town, the Gold Coast, the Orleans and the Suncoast. Boyd is also a big player in the downtown Las Vegas market.
Boyd on Sunday also said it supports Station's motion that Station be granted a four-month extension of the period in which Station can exclusively propose a plan to reorganize its finances. That period is due to expire Nov. 25.
But Boyd's support comes with a catch.
Boyd said that during the extended period, it wants Station to share more financial and operating information so Boyd or other potential bidders can make a more informed bid for some or all of Station's locals casinos.
In court papers, Boyd asked that the court "condition any such extension on certain reforms and cooperation by the debtors in order to facilitate competition and allow alternatives to any debtor plan proposal to be developed during that extension, for evaluation by an examiner, the Unsecured Creditors Committee and others authorized by this court."
Boyd is a creditor in the case, having acquired a stake in Station's debt. The company isn't disclosing how much Station debt it controls, a spokesman said Sunday.
Boyd said in its court papers that competition for any plan to be proposed by Station would be good for all creditors by maximizing the return creditors may receive.
Attorneys for Boyd said if alternatives to a Station plan of reorganization are to be developed, "the potential buyers or other proponents of such alternatives need a modest amount of data, none of which would be competitively harmful to the debtors' business."
Boyd also fired back at assertions by Station that Station had given Boyd's earlier expression of interest "due consideration" and rejected it as being non-binding, non-specific and highly conditional.
"The debtors' statements ignore a critical fact -- that the debtors lack of meaningful cooperation has made it impossible and commercially impractical for Boyd to be able to make the kind of specific, binding and substantially unconditional bid that Boyd was and is eager to make," Boyd said in Sunday's filing. "No rational buyer would make a binding and unconditional offer to buy assets of a business like Station and its affiliates without during due diligence ..."
Boyd also submitted examples of "modest data" that Boyd would expect any buyer to need in order to help make a binding offer.
Examples of the information sought include monthly financial statements and capital spending, by property, for the last three years; as well as financials relating to joint ventures, Indian gaming contracts, other investments and corporate expense detail.
The list also includes a schedule of property leases with detailed information on the leases, a schedule of liabilities and obligations not appearing on the company's balance sheet including unasserted and threatened claims, guarantees, letters of credit, unfunded pensions, deferred payments and off-balance sheet financings.
Also, a schedule of deals with affiliates, related parties, associates and third parties "negotiated in a manner not considered in the ordinary course of business" or "not considered arms-length in nature."
Also, details on known or potential tax obligations arising from various transactions, apparently including the 2007 going-private deal.
And information on "possible significant environmental compliance and pollution issues" and "environmentally-related accidents" and any employee health and safety concerns from such accidents.
boyd gaming will bring some credibilty to these hotels. stations had a great thing going and ruined it.
It appears to make sense for Station Casinos to downsize.
They should get together with Boyd Gaming through the reorganization and work out acquisition scenarios that create a win for everyone.
Make it a positive for stakeholders, employees, customers and the community at large.
Contrary to Sun's opinion, Sunday filings in Federal BK cases are not unusual. All of the filings are done electronically with the Federal Courts(via internet)....regarding Boyds motion, this could be bad news for Stations current owners; or good news depending on how Stations use Boyd's motion...... The only way the existing owners of Stations could have retained ownership was submitting a cramdown plan which would need to be approved by the majority of the secured and unsecured creditors, and then approved by Judge Zive.....Certain Federal laws in BK court, such as "absolute priority", do not allow an exisiting equity holder to retain any equity over an impaired creditor who rejects a cram down plan (also covered in 1111b motions, which require the new equity ownership to pay in full impaired creditors, whilst those creditors cannot vote on the plan of reorganization if they opt for this and will receive only present day value of their claim).....what is required to get a Federal Judge to approve a cramdown is new cash infusion from the owners (which must be in the form of a new ownership entity)...this is why Stations Casinos current owners will now have a serious problem with Boyd competing for the new equity ownership of the properties (after billions of dollars of cramdown of the current secured and unsecured debt)...Boyd will need to contribute $300M-$500M into the new ownership and assume the crammed down debt (paying unsecured creditors five cents to 15 cents on the dollar) to win this fight with Stations (who already played their hand in the spring when they tried to sell their pre-approved plan to the creditors with a $250M cash infusion); the secured debt will be crammed down to current market value of the properties based upon 6.5X to 7X NOI (net operating income)......my advice to the Fertittas (and their idiot partner Tom Barrack, who has lost more money in RE than anyone on this planet)is to not lose the reorganization fight to Boyd because the cram down of debt (billions of dollars) will be worth the additional cash infusion, even if Fertitta/Barrack need to infuse $1B...the Boyd cometing bid will actually help Fertitta/Barrack get their cram down approved by Judge Zive if they have the guts to infuse $500M to $1B (which they should do as previously advised).....sftycoon1
The Fertittas aren't selling the company their father created. Yeah they sold it when they went private, but they still own and run the company. When you hear Stations, you think Fertitta, not Barrack nor Sartini. The Fertittas ego's are so big that selling while in bankruptcy would be losing, something the Fertittas aren't doing. Look at their ego's, they own the UFC/Pride, you can't get any egotistic then that.
i personally have never understood the concept of "locals casinos", but i guess stupid people think they get a better deal there.
anyway, i don't like boyd taking over stations. it's just removing one big company and replacing it with another company.
less competition = bad for consumers.
that's a big part of why the strip is spiraling downward.
stevem...That was Stations game plan from the getgo. What's good for the goose is good for the gander. Stations tried to buy up all the competition so they can squeeze customers with lower payouts on their machines and tighter comps. It would be their just dessert if they were swallowed up by the very competition they tried to eliminate.
Boycott Stations until the Fertitta's are gone.
I agree with stevem. There is too little competition for the gambling dollars, and the monopolized big box casinos are screwing over the gambler with crappy table games odds, tight slots, expensive rooms and food, shows etc. They stopped Howard Hughes from gaining a monopoly back in the sixties, so should they be doing the same to the big three and Boyd, Fertittas etc.
dgump, Barrick may have the $500MM - $1 billion to invest, but the Ferittas don't, unless they plan to sell UFC to raise the funds, a move which would be plain crazy IMHO as UFC is worth far more long term than Station is likely to be worth.
Barrick could put the money in, but are Station's 18 properties really worth 500MM - 1 billion right now if you are Barrick??
There are a lot of better places to spend that kind of money right now.
newyorkrebel....I think Fertitta/Barrack are 25-75% partners; so Fertittas share would be $100M-$150M. I heard UFC is leveraged with $350M debt, so it would be hard to get a mezz.loan for $100M against UFC unless they get it from Barracks group who already have a vested interest in making the deal work. If I were them I would do it (inject the capital) becuase the market will turn in <10 years and the current debt will be discounted several billions of dollars to current asset values...
Go get em BOYD!
In any event, litigation is and will be costing Stations a fortune. Money that could be better put to use for the company and its employees. Maybe then, business will improve for Stations, allowing it to pay creditors in full instead of using those same funds to try to screw the creditors.
I don't know why Boyds is so interested in purchasing Stations. With their problems and Echelon never being built I would think that they would try and improve their current Casinos. I believe their goal is to take the best properties of Stations (RED ROCK, GREEN VALLEY,ALIANTE) for pennies on the dollar and sell some of their lesser properties ( Coast, Main Street )
Gold Coast is anything but a lesser property! I haven't seen many casinos like this in Vegas that are so busy and yet....not so new anymore. The Gold Coast must be a gold mine, and given the fact that the WSOP takes place right across the street year after year they must be fully aware of that and will be sold out during the entire period of the WSOP.
In addition to that, with China Town being so close of the Gold Coast, they have an excellent market for their mini baccarat games. No wonder there are so many of these games running day after day. For some reason, Boyd is a successful company.
It's a good move on Boyd Gaming. They are a stable entity. Something has to be done.
just got back from vegas and was at palace, texas and red rock - lots of people at the red rock - tables were empty at the other two and slots emply - plus emply jackpots all over vegas. even downtown - won a few small pots but nothing big - saw 2 winners royal on a machine for 1,000 at vegas club and 1,400 on keno machine at plaza -nothing else - should be calling it LOST Vegas - plus half the air port was shut down and found out us air is shutting down 36 flights to vegas in February - so what does that tell YOU??? Use to go 3 or 4 times a year - going back in Feb for the nascar race and thats it for me - no more - not worth it
I am a long time employee for Sams Town Tunica and I have met Mr. Boyd and his daughter and they are very nice people.Boyd gaming is a family owned business also and they always have been.They base their business on honesty, integrity and dependability as well.I have worked for Boyd gaming for many years and I believe the people that he does business with has to show him that they have the same integrity that he does in order for him to do business with them.