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The company has sought protection under chapter 11 of title 11 of the United States Code, along with its affiliates. The affiliates, collectively the debtors, continue to conduct their businesses as debtors-in-possession. The casino operator remains in discussions with its lenders and the holders of the Notes regarding a possible reorganization of its capital structure, it added.
The company also entered into a Second Forbearance Agreement and Second Amendment to the Credit Agreement with the lenders holding a majority of the commitments under its senior secured credit facility. The lenders have agreed to forbear from exercising their default-related rights against some units, that guarantee the company's obligations under the credit facility, until the effective date of a plan of reorganization under the Chapter 11 Case or January 31, 2010, whichever is earlier. A previous forbearance expired on July 17.
Station Casinos further said that its direct and indirect units that operate its hotel and casino properties have not filed for bankruptcy relief and continue to operate their businesses as usual.
Station Casinos owns and operates 10 hotel casinos in Las Vegas under the Station and Fiesta brand names, which mainly target local gamblers. The company also operates eight smaller casinos in the Vegas area.
The filing with the SEC further stated that apart from cash generated from its operating subsidiaries and affiliates, the company's senior secured lenders have agreed to allow it to borrow, subject to court approval, up to $150 million of cash from one of its non-operating subsidiaries.
The company's largest unsecured creditors are Law Debenture Trust Co., Fidelity Management & Research Co. Oaktree Capital Management, Western Asset Management, Goldman Sachs Asset Management and Franklin Templeton Investments.
The economic crisis has hit the gambling business deeply by drastically reducing corporate as well as consumer spending and tourism activities. Casino operators, which have been on an aggressive expansion spree prior to the recession, are now faced with mounting debts and incomplete projects.
It was reported last week that Casino operator Las Vegas Sands Corp. (LVS | Quote | Chart | News | PowerRating) is planning to apply in Hong Kong for an initial public offering of shares in its Macau casinos and is seeking amendments to its bank borrowings in Macau, which includes covenant relief and permission to sell about $1.5 billion in new debt. Las Vegas seeks cash to restart work on its hotel and casino complex on Macau's Cotai Strip. Construction of the 20,000-room building, costing $12 billion, stopped last year when the financial crisis deepened.
Smaller casino companies like the Las Vegas Tropicana and Trump Entertainment Resorts also had to file for bankruptcy in the recent past.
Station Casinos, founded by the Fertitta family, was taken private by Colony Capital LLC and management last year. In February, the Fertitta family and Colony Capital's Tom Barrack had proposed a prepackaged bankruptcy plan, which did not take off. The company also had a $950 million offer from Boyd Gaming Corp. for most of its assets, which it declined and instead decided to proceed with restructuring.
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