Auction of Station Casino Properties Continues Even as Boyd Backs OutThu, 05 Aug 2010 15:54
Station Casinos Inc., the United States' biggest gaming company that recently filed for bankruptcy, will have its assets auctioned on the first week of August. Amidst the jockeying of the major players interested in acquiring Station Casino's assets, it was recently confirmed that a major contender, Boyd Gaming Corp., abandoned its bid for some of the bankrupt company's assets. The main reason cited were issues with the auction conditions that were approved by courts of the state of Nevada. Boyd's backing out was confirmed with a statement released on Friday, July 30th, with Keith Smith, Boyd Gaming's President and CEO, saying that it would now be futile for Boyd to bid on any of the 11 Station Casino properties up for auction as the court-approved conditions for auction would now give an undue advantage to Station Casino insiders. The auction, which is slated for August 6, attracted some competition between Boyd Station's existing owners. The latter is seeking to retain control of the auctioned property after bankruptcy. July 30 was the deadline for interested bidders to present their offers to a Nevada judge that would oversee the auction proceedings. Boyd's objections Boyd's objections include bid conditions that require the awarded bidder to pay for the leased land. The existing owners would also retain customer lists and information technology infrastructure. The winning bidder will retain old employees and executives who have been unemployed because of the bankruptcy. Concerns over these conditiones prompted Boyd to drop out, since bidding procedures, according to the Smith, the company's CEO, favors the insiders. Boyd's involvement Boyd's involvement in Station Casinos started in February 2009 when it made preliminary bid only weeks after the casino company based in Las Vegas proposed filing for bankruptcy. Station ultimately filed for Chapter 11 protection last July after failed talks with existing creditors and after the company had compiled debt when it was taken private by Fertitta management and Colony Capital in 2007. In December 2009, Boyd offered $2.45 billion in cash and even offered to assume some of the debts. However, court processes had to be followed, and thus, the acceptance of bids for auction started. Last players standing With Boyd's withdrawal from the auction, the major player, as expected, would now be Station's existing owners, the Fertitta family who founded the gaming company and Colony Capital LLC. The combined efforts of the two players opened the bid with $772 million of new equity. Meanwhile, two more Station Casino properties, Green Valley Ranch and Aliante Station, which are not part of the bankruptcy or the auction, are also deep in debt. Station has claimed in court papers that they are continuing efforts to restructure the debt of these two properties.