Station Casinos gets extension on bondholder buyout

Mar 3, 2009 8:43 PM

Station Casinos announced today that it had struck a deal to extend the date for accepting its offer to buy out bondholders under a restructuring plan.

Bondholders now have until April 10 to accept or reject Stations’ offer.

The previous deadline was midnight on March 2, which coincided with the ending grace period on a missed interest payment on Feb. 2.

Technically, Station Casinos has entered into "forbearance agreements" with the majority of bondholders and the lenders holding most of the commitments under its Credit Agreement, dated as of November 7, 2007.

The company said that these forbearance agreements will provide the company with additional time to continue discussions regarding the terms of its plan of reorganization with its lenders and the holders of its senior and senior subordinated notes.

If Station Casinos hadn’t received the forbearance agreements, the bondholders could have begun a foreclosure process that could wrest control of the company away from current management.

But it would have been more likely that Stations would have first filed for bankruptcy protection under Chapter 11.

Under bankruptcy protection, a bankruptcy court trustee could "referee" the dispute between bondholders and management, with the trustee making a determination as to what would be a "fair" amount for a buyout.

As noted in another GamingToday article published today, an offer from Boyd Gaming to buy certain Station Casinos assets may have had an influence on the bondholders’ decision to extend the time for negotiating a buyout.

It’s been estimated that Boyd’s offer to purchase would be worth about 16¢ on the dollar to bondholders.

Stations’ offer to bondholders varies, depending on the level of note held, from about 3¢ on the dollar to 50¢ on the dollar.

However, some sources close to Stations’ upper management scoffed at Boyd’s offer, calling it "unrealistic" and simply a "ploy to embarrass" Station’s upper management.

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