Station Casinos will receive up to $244 million in rescue financing from its equity holders, Los Angeles private equity firm Colony Capital and the Fertitta family.
Las Vegas: down on its luck
Brothers Frank and Lorenzo Fertitta – who between them also own the Ultimate Fighting Championship brand – run Station as chief executive officer and president respectively.
“It is no secret that current economic conditions in our country have had an adverse effect on Las Vegas in general and the casino business in particular,” said Frank Fertitta in a statement. “However, we believe that the steps we have taken and those we are proposing to take will result in our company being well positioned for the future.”
In 2007, Colony bought the casino and entertainment business, which owns 13 casinos and resorts and operates a number of others, predominantly in Las Vegas, for $8.8 billion alongside the Fertitta family.
Station recently missed a $14.6 million interest payment on its subordinated notes and said it is considering implementing the financial restructuring under Chapter 11 of the US Bankruptcy Code.
The casino industry – with its reliance on discretionary spending – has been hit hard by the economic slowdown. In November 2008, Las Vegas-based casino operator Harrah’s Entertainment, backed by private equity firms TPG and Apollo Global Management, instigated debt restructuring process to avoid default amid declining revenues.
Station expects to have lost $2 million in the fourth quarter of 2008 due to a 19 percent decline in revenues over the same period. As of the end of January 2009, the business has $350 million in cash, it said.