Boyd Gaming on Monday announced it was still "committed" to buying up to all of Station Casinos’ assets, even after Station last week rejected its unsolicited buyout offer.
"Boyd Gaming remains committed to pursuing a transaction to acquire some or all of the assets of Station, and is prepared to work with Station in a timely fashion to prepare a formal proposal," Boyd said in a statement released Monday.
Last week, Station Casinos rejected Boyd’s offer to purchase seven of Station’s 18 casinos for $950 million, citing its own commitment to a restructuring plan that requires bondholder approval.
Station entered into "forbearance agreements" last week with the majority of bondholders and the lenders holding most of the commitments under its Credit Agreement, which extended the foreclosure date to April 2, giving the company more time to negotiate with its lenders.
In addition to continuing with its restructuring plan, Station management suggested other concerns in rejecting Boyd’s offer: it didn’t want to reveal confidential company information to a competitor, regulatory approval could prove to be difficult and Boyd had financing questions of its own with a mothballed Echelon Place still on its books.
In its response Monday, Boyd addressed some of those concerns. Regarding sharing sensitive company information and its financial position, Boyd said it would "work with Station to employ standard and customary due diligence methods to minimize the risk," and that the company has "sufficient liquidity under its credit facility to finance a cash transaction."
Beyond those factors, Boyd said its offer was a better deal for bondholders.
"Boyd Gaming continues to believe the proposal outlined in its Feb. 23, 2009 letter offers a superior recovery to creditors when compared to the current restructuring offer Station has proposed," the statement said.
According to one analyst, Boyd’s offer of $950 million equates to about 16¢ on the dollar for bondholders.
Stations’ restructuring plan includes offers to bondholders ranging from 10¢ to 50¢ on the dollar in new notes and cash, according to published reports.
According to sources close to Stations’ top executives, there was virtually no chance the company took Boyd’s offer seriously.
The highest levels of management considered the offer "a low ball deal," and some suggested it was made to "muddy the water" as Station tries to tie together its restructuring with bondholders.
"All Boyd did was muddy the water," said a source close to Stations’ upper management. "The board of directors at Stations believe the offer to bondholders is a fair one."
If bondholders don’t accept the buyout offer and the company goes into Chapter 11 restructuring, Boyd indicated it would act as the minimum price bidder in a bankruptcy auction sale.
However, it might not get to that point, if a bankruptcy court trustee "requires" the bondholders to accept a stipulated "fair offer" from management
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