Full Tilt Poker and Government Reach Agreement, Can Continue Operating Abroad
April 20, 2011
Since this past weekend, MMAPayout has been providing an in-depth look at the recent indictment against major online poker sites, including Full Tilt Poker (“FTP”), and what it means to the MMA world.
At the outset, the agreement makes clear that FTP’s access to the domain under the agreement is contingent on FTP no longer providing the ability for (or facilitating) U.S. based poker players from engaging in online poker for “real money.”
Specifically, the agreement provides:
FTP hereby agrees that for the duration of the Agreement, it will not allow for, facilitate, or provide the ability for players located in the United States to engage in playing online poker for “real money” or any other thing of value.
That said, the agreement expressly allows for online play outside the United States:
The Agreement does not prohibit, and, in fact, expressly allows for, FTP to provide for, and facilitate, players outside of the United States to engage in playing online poker for real money through the Domain, or any other domain names, sub-domain names, websites, or Internet-based means of communication under the control of FTP.
While I don’t know enough about FTP’s revenue stream, i.e. how much comes from abroad as opposed to the U.S., this may somewhat mitigate against the negative effect the indictment has on the MMA world.
The agreement also provides a bit of good news for U.S. based poker players as FTP has been given access to its domain to facilitate the withdrawal of funds held in accounts with FTP by U.S. based poker players:
This Agreement does not prohibit, and, in fact, expressly allows for, FTP to utilize the Domain (and any other forms of communication) to facilitate the withdrawal of U.S. players’ funds held in account with FTP. While withdrawal of funds is expressly permitted, the deposit of funds by U.S. players is expressly prohibited. FTP agrees that any financial transactions with players located in the United States shall be strictly limited to the return of those players’ funds held in account with FTP.
So it looks like U.S. account holders will be given the opportunity to request withdrawals from their FTP accounts.
With respect to its term, the agreement provides as follows:
This Agreement shall remain in place until: (i) the conclusion of the litigation in United States v. PokerStars, et. al., 11 Civ. 2564 (LBS) in the United States District Court for the Southern District of New York; (ii) a superseding Agreement is reached between this Office and FTP; or (iii) this Office and FTP mutually agree to terminate the Agreement.
Finally, the agreement provides that it “does not constitute an admission of liability as to any matter nor a consent to jurisdiction.”
Fight Lawyer
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Justin Klein is a partner of the law firm Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry. He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website. He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training. Justin lives in New York City where he trains in jiu jitsu and boxing.
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“Huge” Full Tilt Poker Sponsorship Deal With UFC Off Table After Indictment
April 18, 2011
MMAPayout detailed what it meant to the MMA landscape after Friday’s shocking news that Full Tilt Poker, along with other online poker sites, were seized by the FBI and indicted for bank fraud, illegal gambling, and money laundering.
Today, CNBC’s sports business reporter specialist, Darren Rovell, reported the following on his twitter:
“The UFC had a huge new sponsorship deal on the table with Full Tilt that will now go out the window with the feds bust.”
MMAPayout spoke to members and managers within MMA industry, all sharing the same sentiment. They claim that the new deal would have been huge for the UFC, Strikeforce, and the fighters, but specifically, it really hurts the fighters as Full Tilt Poker is one of the better paying sponsors out there for those trying to make a living from the sport.
On Friday, MMAPayout reported that Full Tilt Poker was ramping up their promotional efforts with Strikeforce after Zuffa had acquired them, not to mention the big deal made between Fertitta Interactive (also owners of the UFC) and Full Tilt Poker a few weeks prior pending on legalizing online gambling in the United States, a bill that is being pushed by UFC/Station Casinos/Fertitta Interactive backed Nevada Senator Harry Reid. With the growing relationship, Full Tilt Poker was going to be heavily involved in future UFC events and promotional efforts that would have brought a good money to Zuffa and the fighters.
MMAPayout has also learned that Full Tilt Poker was expanding their sponsorship efforts within MMA (outside of the UFC) and was working on some other pretty big sponsorship deals that have since fallen through as well.
Payout Perspective:
As to what type of money MMA gets from Full Tilt Poker, Rovell discusses it a bit more here in his write-up breaking down the poker FBI bust. Brian Belasbough of Poker Royalty talked about some of the ramifications for the poker industry after Friday:
When Pokerstars, Full Tilt and Absolute Poker left the US market, 95 percent of the market share for US poker players absolutely disappeared and with that so did $200 million worth of marketing money and advertising money that these companies spent in order to acquire new customers. What that means is basically poker television shows like “The Big Game” on Fox and “Poker After Dark” on NBC are completely gone. So the poker landscape has changed dramatically in a very short period of time.
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In addition to the poker television shows going away, there are a number of other sponsorship opportunities which have disappeared as well. There are 100 online poker players with sponsorships which likely will disappear. In addition to that there’s an entire industry of covering poker tournaments in the media in conjunction with that. ESPN had a $22 million deal with Pokerstars, which has to be over now and then the live events like the World Poker Tour, like the North American Poker Tour.
The other question that you have to ask here is that with the big sponsorship void left by Full Tilt Poker in MMA, what type of companies will step in and take their place? We also have to wonder what it says about MMA as a sport considering that one of its biggest sponsors was an illegal gambling company that had been operating and generating revenue through banking and legal loopholes. Big mainstream sponsors is something that the UFC and MMA has coveted for years, but luring them in hasn’t been as easy as once expected. The addition of new sponsors and TV networks could reveal a telling story about the ceiling of the sport in the next few years.
Focusing on the fighters, they have been taking bigger blows outside of the ring/cage than inside as of late. The removal of Full Tilt Poker as one of their bigger sponsors wasn’t the only blow dealt to them in the past year. When Authentic Brands Group purchased Sinister, Tapout and Silver Star (MMA apparel) and then decided to scale back their sponsorship money in MMA, it dealt an equal sized blow. One has to wonder with the lack of big MMA promotions outside of Zuffa and with the recent trend of dying sponsors, how difficult it will be for fighters to make a living in the sport, which wasn’t an easy task before either.
FullTilt Poker & Others Indicted, MMA Sponsorship Status, & UFC’s Involvement
April 15, 2011
MMAJunkie broke the news that FullTiltPoker.com, PokerStars.com, and AbsolutePoker.com were seized today by the FBI and indicted for bank fraud, illegal gambling, and money laundering.
The implication of these charges could have a great impact on MMA, as FullTiltPoker.com (among other poker sites) invest a great deal of money into sponsoring MMA promotions such as the UFC and Strikeforce, as well as individual fighters.
Sam Spira, owner of Xtreme Couture management said the following:
“This is a disturbing development,” Spira told MMAjunkie.com (www.mmajunkie.com). “Full Tilt was one of the remaining pro-fighter sponsors that has strongly supported MMA over the past few years. The importance of the ongoing interplay between supporters and fans of poker and supporters and fans of MMA cannot be underestimated.”
Ken Pavia of MMA Agents gave some input as to what the poker companies are going through right now:
“The online poker companies don’t have a complete handle on it at this time, but they’re doing their due diligence to find out what the full impact is,” Pavia said. “In the short-term, it will severely impact fighters’ sponsor revenue, which traditionally matched their show pay for our televised clients. I would venture to say the poker industry is equal to apparel industry as the No. 1 sponsor of fighters outside the UFC.”
Jene Gene of Magnetic MMA points out that the “.net” versions of the poker sites are the ones sponsoring the promotions and fighters, and that they are compliant since they are for educational and entertainment purposes, not for gambling (FullTiltPoker.net is still functional). As for Zuffa’s newly acquired MMA promotion Strikeforce, which FullTiltPoker is a major sponsor, they told MMAJunkie that they are “looking into the situation specifically how it relates to our deal”, and would not comment any further.
Payout Perspective:
ESPN goes into more details regarding the charges on the poker companies:
The Manhattan U.S. Attorney announced the indictments of those involved with the online poker sites as well as those who were responsible for the financial transactions. The 11 defendants are Isai Scheinberg and Paul Tate (PokerStars), Raymond Bitar and Nelson Burtnick (Full Tilt Poker), Scott Tom and Brent Beckley (Absolute Poker) and Ryan Lang, Ira Rubin, Bradley Franzen, Chad Elie and John Campos (involved with payment processors).
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Manhattan U.S. Attorney Preet Bharara said in the indictment: “As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits.
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The companies are all based overseas. The indictment sought $3 billion in money laundering penalties and forfeiture from the defendants.
As for the penalties the companies are facing:
The charges are conspiracy to violate Unlawful Internet Gambling Enforcement Act (UIGEA), violation of UIGEA, operation of illegal gambling business, conspiracy to commit bank fraud and wire fraud, and money laundering conspiracy . Maximum penalties from these charges range from five years in prison and a $250,000 fine to 30 years in prison and a $1,000,000 fine (or twice the gross gain or loss).
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“These defendants, knowing full well that their business with U.S. customers and U.S. banks was illegal, tried to stack the deck,” said Janice Fedarcyk, FBI assistant director-in-charge. “They lied to banks about the true nature of their business. Then, some of the defendants found banks willing to flout the law for a fee. The defendants bet the house that they could continue their scheme, and they lost.”
Zach Arnold of FightOpinion.com points out the potential severity for the MMA landscape:
This is enormous news. Full Tilt is a Strikeforce sponsor and they also recently made a deal with the Fertittas to try to work on getting legalized gambling in the states. (Harry Reid and others in Congress were on the same wavelength.) The huge irony — this same prosecutor is one that Dana White thanked in fighting piracy of UFC footage.
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When discussing this story, you simply can’t avoid the politics of it. The political climate was growing in the US Congress to work out legislation for online gambling in the States. Harry Reid, who Zuffa management helped out politically in his 2010 re-election campaign, was receptive to the idea of legalization. Several other key players, like Barney Frank, were also keen on the idea. After all, legalize-and-tax made perfect sense. The political climate became so positive that the Las Vegas casino power players like Steve Wynn and the Fertittas got involved in deals with companies like Full Tilt Poker.
Arnold points out the irony involving the prosecutor in this case, which is the same who Dana White publicly thanked in being aggressive in anti-piracy efforts relating to copyright issues with Zuffa property.
Another interesting point to note is that due to the charges, Forbes reports that Steve Wynn has cut ties with PokerStars, one of the poker sites indicted, after announing to team up with the company only a few weeks ago. The UFC and the Fertittas are in the same boat, as Full Tilt Poker and Fertitta Interactive just announced an online poker deal just weeks ago and the UFC was working on promotional deals with FullTiltPoker for upcoming events and would further it’s involvement if the online gambling bill was ever passed. Strikeforce has expanded their promotional dealings with FullTiltPoker since they were acquired by Zuffa as well. The Las Vegas Review-Journal has the story behind Fertitta Interactive and FullTilt:
Online gaming giant FullTilt Poker and Fertitta Interactive, which is co-owned by the family that founded Station Casinos, have struck a partnership to operate an Internet poker website if the activity gains federal approval.
…The agreement covers only potential federal legislation for Internet poker, said Tom Breitling, who co-owns Fertitta Interactive with brothers Frank Fertitta III and Lorenzo Fertitta and his longtime business partner Tim Poster.
…“We believe that a federal law for online poker is the way to go,” Breitling said. “We do believe that a federal online poker bill would be good for Nevada. Nevada is a leader in gaming regulation, and we need the thousands of high-paying high tech jobs and the millions in tax revenues associated with online poker.”
The political and gambling ties don’t stop there for the Fertittas, who own Station Casinos and backed up and openly campaigned for Nevada Senator Harry Reid, who is now trying to legalize online poker, a move that could make UFC and Station Casino owners a good amount of money. ESPN also ran with a story titled “UFC Pikcing Political Sides”, stating that UFC’s Chuck Liddell, Randy Couture, and Dana White were openly campaigning and swaying the UFC fanbse to become supporters of Reid.
The Wall Street Journal reports on Reid and the gambling bill:
Mr. Reid, who has opposed online gambling in the past, is holding his cards close to his vest regarding plans to move forward with the legislation. Passing such a measure is highly uncertain as the heated session winds down, given the sensitive nature of the subject.
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Previous attempts at online-gambling legislation haven’t moved forward, but casino interests believe that given Mr. Reid’s powerful position atop the Senate, he might be able to push the poker measure into another bill, according to people familiar with the discussions.
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The legislation would overturn a bill passed in 2006 that bans financial institutions from processing online-gambling transactions. That led publicly traded companies to pull out from operating online sites in the U.S. In their place, offshore sites have gathered an estimated 10 million U.S. poker players, according to the Poker Players Alliance.
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According to the draft of the bill reviewed by The Wall Street Journal, Mr. Reid’s office is considering language that would allow only existing casinos, horse tracks and slot-machine makers to operate online poker websites for the first two years after the bill passes, which could limit the ability of other companies to enter the market.
Back in October of 2010, BloodyElbow’s Luke Thomas wrote a piece titled “UFC Tries to Help Nevada Senator Harry Reid, Deepens Political Involvement”, which delves deeper into UFC’s political involvement regarding the legalization of MMA, legalizing online poker, fighting internet piracy, and their ability to make and use political allies to accomplish future goals and further expand their bottom line.
Fertitta’s Likely to Retain Station Casinos
August 10, 2010
Alexandra Berzon of the Wall Street Journal reports that Frank and Lorenzo Fertitta will likely retain control over Station Casinos in the aftermath of a year long bankruptcy proceeding.
The founding family of Las Vegas casino owner and operator Station Casinos Inc. appeared poised to remain in control of the company as 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.
Payout Perspective:
The news that the Fertitta’s were able to retain control of Station shouldn’t come as a tremendous shock; the writing has been on the wall since March. However, I did find the following excerpt particularly interesting:
Under the new plan, the Fertittas took an equity stake in a new company that would own four of Station’s casinos, with lenders owning much of the rest of the new company. 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.
If you combine the ~$120 million from the 10% stake in Zuffa with the company’s rather aggressive dividend policy over the last few years, the Fertitta’s have received more than enough cash to fund this Station retention bid without dipping into family money.
Station Casinos Reaches Deal with Creditors
March 5, 2010
Steve Green of the Las Vegas Sun reports that the management of Station Casinos have reached a deal in principal with key lenders that will allow them to reorganize and retain control of the company.
While the company didn’t disclose details, the arrangement with lenders holding $2.475 billion of debt secured by four of Station’s most valuable hotel-casinos is expected to result in the lenders swapping some debt for equity in the company.
While there has been discussion in the bankruptcy case that the lenders could take control of the four properties and that the properties would be spun off or sold, the agreement disclosed today does not do that.
Instead, the deal — if approved — would keep the company and its 18 casino properties and extensive land holdings together.
It’s expected members of the founding Fertitta family, along with Station majority owner Colony Capital of Los Angeles, would maintain equity stakes.
The Fertittas would make a substantial, but undisclosed, equity investment and the current management team led by Chairman and Chief Executive Frank Fertitta III would continue to lead the company.
Payout Perspective:
The deal was unofficially announced February 25th; just a few weeks ahead of the deadline imposed upon the parties by US Bankruptcy Court Judge Gregg Zive. The expectation is that a formal announcement will take place this summer.
Note: the “substantial, but undisclosed, equity investment” that the Fertittas will have to make in order to retain control of the company. The cash from the 10% sale of Zuffa LLC. to Flash Entertainment in Abu Dhabi might come in handy.
Station Casinos: Judge Urges Negotiation
January 27, 2010
Cy Ryan of the Las Vegas Sun reports that a federal bankruptcy judge has advised Station and its creditors to re-enter negotiations in order to avoid a ruling that may not be in the best interest of the business.
After six hours of arguments, a federal bankruptcy judge advised Station Casinos and unsecured creditors to hold negotiations over a $2.3 billion debt, rather than face legal action.
U.S. Bankruptcy Judge Greg Zive withheld a ruling on the petition by the unsecured creditors to be allowed to sue over the arrangement of the 2007 leveraged-buyout deal that took the casino company private.
Susheel Kirpalani, attorney for the creditors, told the judge the creditors “were left holding the bag” while “insiders and fat cats” got big payouts in the $8.9 billion buyout by Colony Capital and the Fertitta family.
“The unsecured creditors were harmed by the transaction,” Kirpalani argued. He called it a fraudulent transfer.
But Thomas Kreller, attorney for Station, said a suit would result in “acrimonious litigation” and would disrupt the chances of coming up with a plan for the company’s reorganization.
He said denial of the unsecured creditors’ right to sue wouldn’t extinguish the money owed. But permitting a suit, Kreller said, would result in “significant and irreparable harm” to Station.
Scott Kane, attorney for the Special Litigation Committee of the Station board of directors, said it looked into claims and determined that the $8.9 million was not an excessive price to pay for the company at the time. There was nothing at that time to suggest the company would fail, he said.
The creditors claim it was too much and it saddled with company with an additional $1.7 billion in debt. But others suggest it was the downturn in the economy that crippled the company.
Zive said he didn’t see any evidence of fraud in the buyout by Colony and the Fertitta family in taking the company private.
Zive advised Station Casinos to allow the unsecured creditors to be a “meaningful participant” in the talks toward reorganization. He said he believed there would be “unintended consequences” if he permitted a suit go forward at this time.
“I find people negotiate when people have a little bit of risk,” in advising the two sides to talk, Zive said. “The creditors deserve to be heard.”
If there are no negotiations, Zive said “I’m willing to rule. It may not be in the best business interest but it will be on the law.”
Payout Perspective:
The news is slightly encouraging for the Fertittas as Zive has stated he doesn’t believe there’s any evidence to support that the buyout was fraudulent. Station management has until sometime in March to get their house in order and secure a new deal with creditors before a ruling would have to be made by Judge Zive – something that’s likely to be met with a great deal of trepidation from both sides.
Station Casinos Bankruptcy Saga Continues
November 27, 2009
Steven Church of Bloomberg reports on the latest developments regarding the Station Casinos bankruptcy process, which has been unfolding over the last several months.
Station Casinos Inc. doesn’t need an examiner to investigate how the company is handling its bankruptcy, the judge overseeing the case said, rejecting part of the takeover strategy pursued by Boyd Gaming Corp.
U.S. Bankruptcy Judge Gregg Zive said at a hearing in Reno, Nevada, that Boyd and other advocates of an examiner appeared to really want a trustee to take control of the company’s bankruptcy case, especially with regard to any potential sale. Zive delayed until Dec. 11 a decision on a related request to end the exclusive right of Station managers to propose a plan to reorganize the Las Vegas-based gambling company.
Payout Perspective:
Station Casinos, owned and founded by the Fertitta family, has been working with creditors since February to restructure nearly $6.5 billion in debt. But in July the corporation filed for bankruptcy.
Now, the Fertittas are fighting to retain exclusive control over the company, and prevent third parties – like Boyd Gaming or other creditors – from establishing competing reorganization bids. We’ll know in the coming weeks whether they’re successful.
There have been rumours in recent months that if things continue to go south at Station, Frank Fertitta III could follow in Lorenzo’s footsteps and join Zuffa in some capacity.
Station Casinos Inc. Downgraded To 'D' On Bankruptcy Filing
July 30, 2009
– Station filed for Chapter 11 bankruptcy protection.
– We lowered our issue-level rating on the company’s senior secured debt to ‘D’.
– We revised our recovery rating on the company’s senior unsecured notes to ’5′ from ’4′.
NEW YORK, July 29, 2009–Standard & Poor’s Ratings Services said today it lowered its issue-level rating on Las Vegas-based Station Casinos Inc.’s $900 million senior secured bank facilities to ‘D’ from ‘CCC’. We removed these ratings from CreditWatch, where we placed them with negative implications on Dec. 15, 2008.
In addition, we revised our recovery rating on the company’s senior unsecured notes to ’5′ from ’4′. The ’5′ recovery rating indicates our expectation of modest (10%-30%) recovery for lenders in the event of a payment default.
We had previously lowered all other ratings on Station, including the corporate credit rating, to ‘D’ following missed interest payments on each of the company’s five senior unsecured and senior subordinated notes earlier this year.
The issue-level ratings downgrade follows yesterday’s filing for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Nevada by Station Casinos Inc. and various of its affiliates. Pursuant to an agreement with the company’s senior secured lenders, none of Station’s casino operating subsidiaries or affiliates were included in the Chapter 11 filings.
This rating action follows our Feb. 4, 2009, research report in which we lowered our corporate credit rating on Station and our issue-level rating on its 6.5% senior subordinated notes to ‘D’ following the missed Feb. 1, 2009, interest payment on the 6.5% senior subordinated notes. At that time, Station also announced a solicitation for votes from eligible institutional holders of its senior unsecured and senior subordinated notes for a restructuring plan under Chapter 11 of the U.S. Bankruptcy Code. We also subsequently lowered our rating on Station’s 7.75% senior notes, 6.875% senior subordinated notes, 6.625% senior subordinated notes, and 6% senior notes to ‘D’, following missed Feb. 15, March 1, March 15, and April 1 interest payments on those notes, respectively.
Complete ratings information is available to RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor’s public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Find a Rating.
Station Casinos Gets Fourth Extension on Restructuring
June 2, 2009
The Las Vegas Review Journal reports today that Station Casinos has received yet another extension to their restructuring plans, allowing to company to avoid a bankruptcy filing for now:
“We don’t know why, yet,” Rapoport, said in response to a question about why Station Casinos’ lenders would agree to another extension. “Four forbearance agreements in a row is awfully nice. Banks are not in business to be nice. They’re also not in business to be mean. They’re in business to make money.”
Rapoport said Station Casinos’ creditors could still be negotiating about which lenders will have priority in a bankruptcy case, she said.
“I wonder how secured any of these banks really are,” Rapoport, a law professor at the Boyd School of Law at the University of Nevada, Las Vegas, said.
“They’re sort of signaling they don’t want to stand on their rights in the bankruptcy,” she also said.
Creditors could also be concerned about how much Station’s assets have been devalued during the recession, leaving the company without strong collateral, she said.
Or, she said, Station could quietly be trying to cut a deal with a buyer to sell some of its assets.
These newest extensions are interesting in that they are for a much shorter time period, keeping Station Casinos on a much shorter leash while in negotiations with debtholders. While there is a clear firewall between the Zuffa-held UFC and Station Casinos, there share a common lineage owing to Lorenzo and Frank Fertitta.
Station Casinos' 6.625% Senior Subordinated Notes Lowered To 'D'
March 20, 2009
NEW YORK, March 20, 2009–Standard & Poor’s Ratings Services said today that it lowered its issue-level rating on Las Vegas-based Station Casinos Inc.’s 6.625% senior subordinated notes to ‘D’ from ‘C’. The rating action reflects the missed March 15, 2009 interest payment on the notes. A payment default has not occurred relative to the legal provisions of the notes, because there is a 30-day grace period to make the payment. However, we consider a default to have occurred, even if a grace period exists, when the nonpayment is a function of the borrower being under financial stress–unless we are confident that the company will make the payment in full during the grace period.
This rating action follows our Feb. 4, 2009 research report in which we lowered our corporate credit rating on Station and our issue-level rating on its 6.5% senior subordinated notes to ‘D’ following the missed Feb. 1, 2009 interest payment on the 6.5% senior subordinated notes. At that time, Station also announced a solicitation for votes from eligible institutional holders of its senior unsecured and senior subordinated notes for a restructuring plan under Chapter 11 of the U.S. Bankruptcy Code. We also subsequently lowered our rating on Station’s 7.75% senior notes and 6.875% senior subordinated notes to ‘D’, following missed Feb. 15 and March 1 interest payments on those notes, respectively.
In connection with the missed interest payment on the 6.875% senior subordinated notes on March 1, 2009, Station also announced that it has entered into forbearance agreements with holders of its five notes issues and its bank group. Under the terms of the forbearance agreement, noteholders have agreed to forbear from exercising remedies with respect to certain events of default, including the company’s failure to pay interest due, until the earlier of April 15, 2009 or the date on which the forbearance agreement terminates pursuant to the terms of the agreement. Under the terms of the credit facility forbearance agreement, lenders have agreed to grant a limited waiver with respect to the Dec. 31, 2008 covenant violation and have agreed to forbear from exercising their default-related rights against the company through April 15, 2009 and against certain subsidiaries of the company that guaranteed the credit agreement through Oct. 10, 2009.
We expect Station to miss the April 1 interest payment on the 6% senior notes. If and as this interest payment is not made, we will also lower the issue-level rating on these notes to ‘D’. Issue-level ratings on these notes and on the company’s credit facility currently remain on CreditWatch, where we placed them with negative implications on Dec. 15, 2008.
