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Station Casinos and Key Creditors Reach Reorganization Agreement

By Arnold M. Knightly, Las Vegas Review-JournalMcClatchy-Tribune Regional News

Feb. 25, 2010--Station Casinos and key creditors holding nearly 67 percent of the company's secured debt have reached an agreement in principle on a comprehensive reorganization plan, the gaming company was to announce this morning.

Details of the proposal were not available beyond a statement from the company saying that the founding Fertitta family and "certain other current creditors and investors" would make a "significant reinvestment" in the reorganized company.

The company did not disclose if private equity firm Colony Capital, which controls 75 percent of the locals gaming company, would be put any cash into the company as part of the proposal.

In February 2009, the Fertittas and Colony Capital proposed putting $244 million in cash into the company to get lenders to agree to the company's prepackaged bankruptcy proposal.

The management team, led by Chairman and Chief Executive Officer Frank Fertitta III, would remain in place under the plan, according to a statement by the company.

Station Casinos said the agreement in principle is with key secured lenders who hold mortgage debt that is secured by the Red Rock Resort, Palace Station, Boulder Station and Sunset Station.

Approximately $1.8 billion of the company's $2.7 billion in secured debt is secured by the four properties.

The company also announced in a statement that it is making "significant progress" on restructuring discussions with its other creditor groups, which include many of the same lenders led by Deutsche Bank.

"We are extremely pleased to have reached an agreement in principle with certain of our key mortgage lenders for the comprehensive reorganization of our company," Fertitta said in a statement. "This is a very important step in our restructuring process. Our commitment to the successful restructuring of our company is demonstrated by Lorenzo and me making a significant investment in the reorganized company."

Lorenzo Fertitta is Frank Fertitta's brother and is vice chairman of Station Casinos' board of directors.

Station Casinos reported approximately $5.6 billion in debt when it filed for Chapter 11 bankruptcy in July, much of it unsecured.

Station Casinos plans to release details of its reorganization proposal in the next three weeks.

The company has until March 25 to submit details of its restructuring plan to the U.S. Bankruptcy Court in Reno.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.

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