Brothers Frank and Lorenzo Fertitta, sons of the founder of Las Vegas casino owner and operator Station Casinos Inc., will remain in control of the bankrupt company, with much of the debt wiped out,
the
Wall Street Journal
reported.
A bankruptcy judge “approved a determination that a group backed by the family had made the only qualified bid in an auction for part of the company,” the article said. Additional hearings must be held to finalize the plan.
In 2007, the Fertitta brothers took the company private with Colony Capital for $8.8 billion, the article said. The family and other executives received $1.5 billion from the buyout and invested $900 million of that amount back into the company for a 24% stake, according to the report. The brothers “loaded [the company] with debt” by rapidly expanding, according to the
Journal.
Boyd Gaming Co., a rival firm, had offered $2.4 billion for the bankrupt company. Some lenders and bondholders opposed the Fertittas’ plan, contending “that the Fertittas had manipulated the complex structure of the bankruptcy to ensure that there wouldn’t be a fair auction process,” the
Journal
report noted.
The Fertittas have an equity stake in a new company that will own four of Station’s casinos; lenders own most of the rest, according to the report.
That new company then made a $772 million bid for 11 more Station properties to secured lenders owed $900 million, in turn wiping out $2.4 billion owed to unsecured bondholders. Under the plan, the Fertitta brothers will spend a total of around $160 million for 45% of a company with equity worth around $400 million and debt of around $2 billion.
Two additional casinos operated by Station as joint ventures are involved in a separate bankruptcy process, the
Journal
reported. (Source:
Wall Street Journal,
Aug. 7-8, 2010.)
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