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.
I feel sorry for the unsecured bondholders. Capitalism at it’s finest.
I can’t read the WSJ story. But other stories I have read said that the other bidders bowed out because Station is expected to keep gushing red ink and the prospects for Vegas aren’t expected to turn around for a very long time. So congratulations they own a bigger chunk of a sinking ship and they can still wear their skipper hats.
jv, ego can always get in the way of making smart decisions. without the casinos, the Fertitta family is … well, you know what i mean.