|By Arnold M. Knightly, Las Vegas
Review-JournalMcClatchy-Tribune Regional News
May 15, 2009--Station Casinos announced Thursday it expects to receive a third forbearance agreement with its lenders, allowing the company to continue negotiating terms for a prepackaged bankruptcy agreement.
"We expect to receive a forbearance extension from our lenders (today) and are awaiting the paperwork," said Lori Nelson, Station's director of corporate communications.
Nelson wouldn't say how long the extension would be or if terms of the company's prepackaged bankruptcy proposal will be changed, until the signed paperwork is received by the company.
Station's current proposal asks investors holding $2.3 billion in bonds to swap high-cost debt for low-cost debt and cash so the company can enter into a Chapter 11 bankruptcy. The company's owners, the Fertitta family and real estate investment firm Colony Capital, have said they will invest $244 million in cash into the company if bondholders agree to the restructuring proposal.
Word of the possible extension came the same day Station Casinos announced it was able to cut its loss in the first quarter despite continued steep revenue declines, a Thursday filing with the Securities and Exchange Commission shows.
The locals casino company posted a net loss of $33.7 million in the first quarter ended March 31, trimming its loss of $70.9 million from the previous year's first quarter.
The narrowing of the loss was helped by a $40.3 million gain on early retirement of debt when the company repurchased some of its debt in January, according to the filing. It also skipped interest payments totalling $64.1 million in the quarter as part of its prepackaged bankruptcy proposal. Net revenues fell 19.7 percent to $282.7 million this year from $352.3 million in the first quarter last year. Cash flow, recorded as earnings before interest, taxes, depreciation and amortization, fell 28 percent in the quarter to $98 million.
Casino revenues dropped 18.6 percent in the quarter, and food and beverage revenues fell 12.4 percent. Room revenues dropped 27.6 percent, as average daily room rates were cut to $71 per night from $98 per night. Occupancy slipped three percentage points to 85 percent.
The company was able to cut its operating costs by 12.8 percent, led by a 13.3 percent cut in casino operations, a 25.1 percent reduction in food and beverage costs and a 12.8 percent reduction in administrative costs.
Additionally, the company revealed it defaulted on a $250 million land loan during the quarter after the value of the land securing the loan dropped. The loan is secured by 61 acres on the southern end of Las Vegas Boulevard at Cactus Avenue, and some of the 106 acres around the Wild Wild West on Tropicana Avenue west of Interstate 15.
Contact reporter Arnold M. Knightly at firstname.lastname@example.org or 702-477-3893.
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