Station Casinos skips $15.5M interest payment

Feb 18, 2009 12:50 AM
Staff & Wire Reports |

Station Casinos Inc., which plans to reorganize its debt, has elected not to make a scheduled $15.5 million interest payment to its senior noteholders, the privately held company disclosed in a regulatory filing on Tuesday.

The payment was due on Sunday to holders of the company's $400 million senior notes maturing Aug. 15, 2016.

The company previously reported that it decided to skip a $14.6 million interest payment to holders of its $450 million senior subordinated notes. That payment was due on Feb. 1, 2014.

If Station Casinos does not make the payments within the specified grace periods, the company said it will default on the notes, which could accelerate payments for nearly all of the company's debt.

The grace period for the $15.5 million payment ends on March 17 and the grace period for its pending $14.6 million payment expires on March 3.

The Las Vegas-based company also confirmed that it is facing a lawsuit from holders of its outstanding senior and senior subordinated notes that challenges its debt restructuring plan. S. Blake Murchison filed a suit Thursday in U.S. District Court in Las Vegas alleging that its reorganization plan unfairly discriminates against him and other bondholders.

Murchison's attorneys are seeking class-action status for the suit.

The casino operator announced earlier this month that it plans to swap high-cost debt for low-cost debt and a $244 million capital infusion. It plans to have the transaction approved through a prepackaged bankruptcy filing.

In the Securities and Exchange Commission filing, Station Casinos said the lawsuit is without merit because all holders of the outstanding senior notes and senior subordinated notes would receive the same consideration under the proposed reorganization. The company said no old notes would remain outstanding after the plan is completed.

A sharp downturn in consumer spending and tight credit markets have pressured all players in the U.S. gambling industry. On Tuesday, the three Atlantic City casinos once run by real estate mogul Donald Trump filed for Chapter 11 bankruptcy protection.

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