Boyd advances effort to acquire Station Casinos assets

Sunday filing shows Boyd backs lenders seeking a look into finances

Published Sun, Nov 1, 2009 (4:04 p.m.)

Updated Sun, Nov 1, 2009 (6 p.m.)

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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.

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