Boyd Gaming Offers to Buy Station Casinos Assets

By Beth Jinks

Feb. 23 (Bloomberg) -- Boyd Gaming Corp. offered to buy some assets of Station Casinos Inc., the Las Vegas operator that proposed a bankruptcy filing this month, and may be interested in the entire company.

Boyd sent a letter it called a “non-binding preliminary indication of interest” to Station’s directors to acquire all of the company’s assets that do not serve as collateral for secured loans for about $950 million, Boyd said today in a statement. Boyd may offer to buy the rest of Station after a “due diligence review,” it said.

Station, which was taken private by management and private- equity firm Colony Capital LLC in 2007, struggled to pay creditors in a market among the hardest hit by deteriorating home prices and recession-driven job losses. Gambling revenue in Las Vegas last year declined the most on record.

“This value would present a superior recovery to the unsecured creditors of Station versus the current exchange offer” Station made earlier this month, Boyd said today. Station on Feb. 3 offered investors 10 cents to 50 cents on the dollar in secured notes and cash, in exchange for about $2.3 billion of existing bonds.

Boyd, which hired UBS AG as its adviser, said it had about $2 billion available on its revolving credit facility. The $950 million offered is an estimated “enterprise value” of the assets, it said.

‘Will Evaluate’ Plan

“We intend to continue to work with our lenders and bondholders to pursue our previously proposed plan of reorganization, but we will evaluate the terms of Boyd Gaming’s proposal,” Station spokeswoman Lori Nelson said in an e-mail.

Both Station and Boyd are headquartered in Las Vegas and operate casinos that market themselves to local gamblers. Some of Boyd’s 16 casinos are located in New Jersey, Mississippi, Illinois, Indiana, and Louisiana, while all of Station’s 18 gambling facilities are in the Las Vegas area.

Station Casinos on Feb. 3 proposed filing for bankruptcy in collaboration with lenders, in a restructuring to be voted on by March 2. Some secured lenders have agreed to support the plan, the company said.

The buyout offer and bankruptcy proposal came 15 months after Station’s takeover by the Fertitta family and Colony Capital. The company’s casinos include Red Rock Casino and the 3-month-old Aliante Station.

Bankruptcy Proposal

As part of the proposal, affiliates of the Fertitta family and billionaire Tom Barrack’s Colony Capital have agreed to invest as much as $244 million to maintain their current ownership stakes. The family and Colony paid $90 a share, or $5.4 billion, and assumed about $3.3 billion in debt to acquire Station.

In December, Station abandoned a debt-exchange offer for some senior notes after trying to prod investors to accept a below-face-value cash payment or new, discounted notes with longer maturities. In August, Boyd stopped construction of its $4.75 billion Echelon resort development on the Las Vegas Strip.

Station, founded by Frank Fertitta Jr., started as a Las Vegas bingo hall in 1976 and grew into a casino company focused on attracting gamblers who live and work in Nevada’s Clark County, where the population more than doubled between 1990 and 2006.

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