|By Steve Green, Las Vegas
SunMcClatchy-Tribune Regional News
July 27, 2012--Missouri gaming regulators have ordered the biggest investors in Caesars Entertainment Corp. to sever their ties with locals casino operator Station Casinos LLC of Las Vegas, prompting the investors to sell their stake in a Nevada hotel-casino on a rush basis.
During special meetings in Las Vegas on Thursday, the State Gaming Control Board and the Nevada Gaming Commission approved plans in which affiliates of Apollo Global Management LLC and TPG Capital LP will each sell their 19.7 percent stakes in the 202-room, 2,000-slot machine Aliante Station hotel-casino in North Las Vegas.
With Caesars licensed in Missouri with its Harrah's casinos in St. Louis and Kansas City, its biggest investors Apollo and TPG have faced scrutiny there for their investment in Aliante Station because of Missouri disciplinary action 12 years ago against the old Station Casinos Inc.
Station Casinos, reorganized through bankruptcy, is now called Station Casinos LLC.
In 2000, the old Station agreed to pay a $1 million fine to Missouri to settle charges that included allegations that one of its local attorneys there had been engaged in improper contact with a regulator in a bid to boost Station's business in that state. Station also left the market, selling its casinos in Kansas City and St. Charles.
After leaving the Missouri market, Station expanded its locals gambling chain in Las Vegas and worked on Indian casino deals. One of its projects was Aliante Station, a partnership with the Greenspun family, owner of the Las Vegas Sun, that opened in November 2008.
Aliante Station in October was spun out of the 2009 Station Casinos bankruptcy to holders of its debt, including the Caesars investors Apollo and TPG.
For reasons that weren't immediately clear Thursday, Missouri has been insisting Apollo and TPG sell their Aliante Station stakes even though Station no longer owns the property, its management contract there is expected to end in a few months and Station hasn't done business in Missouri in a dozen years.
"Missouri doesn't like Station Casinos," one insider said Thursday.
A request for comment was placed Thursday with the Missouri Gaming Commission. An attorney for TPG and Apollo said they had no comment on the Missouri regulatory directive.
Station Casinos wasn't involved in Thursday's Nevada regulatory proceedings, but issued this statement afterward when it was asked about the regulatory move by Missouri: "It has been almost 12 years since we resolved our disputes with Missouri on mutually agreeable terms. We haven't had any interaction with them since that time and we have no insight into their regulatory process."
Two people with knowledge of the transaction approved by Nevada regulators confirmed it was driven by the insistence of Missouri regulators that the largest owners of Caesars no longer do business with Station Casinos.
For the multibillion-dollar investment companies Apollo and TPG, Thursday's proceedings involving Aliante parent company Aliante Gaming didn't involve huge financial stakes as the total equity reported most recently on Aliante's balance sheet is only $39 million.
But their attorneys clearly have been pursuing a quick resolution of the sale and they thanked the Nevada gaming regulators and their staff for handling it on an expedited basis.
"I thank your staff and apologize to them for having dumped this on them," Apollo and TPG attorney Bud Hicks told the gaming regulators Thursday. "Their efforts have been great and are truly appreciated."
"A need has arisen for the applicants (Apollo and TPG) to divest themselves of their interests in Aliante Gaming," Hicks told the Gaming Commission.
Terms of the sale approved Thursday were not immediately disclosed, but attorneys said they're working to meet Missouri's deadline of next week to wrap it up. That's why the transaction had to be considered during special meetings Thursday as opposed to being considered during the regular August meetings of the State Gaming Control Board and the Nevada Gaming Commission.
It was revealed Thursday that Apollo and TPG will sell their equity and debt stakes in Aliante Station to existing partners in the property including Soohyung Kim, an executive with investment company Standard General Gaming LLC in New York. Former Boyd Gaming Corp. executive Ellis Landau will stay on as an executive and partial owner in the parent company following Thursday's action.
Executives said the change will result in no operational changes at the property as Kim and Landau are already executives in the parent company.
In exchange for their shares and their interests in Aliante debt, Apollo and TPG will receive promissory notes from the purchasing shareholders, meaning they're essentially converting equity into debt. The notes will be backed by the shares and debt interests being purchased by the current insider stockholders.
Aliante Station, having slashed its debt through the bankruptcy process from $378 million to just $50 million, has been profitable since emerging from bankruptcy.
Separately, the Nevada Gaming Commission on Thursday as expected approved a settlement with Caesars in which it will pay a $100,000 fine after minors were found gambling and drinking at four of its Las Vegas casinos; and Shuffle Master Inc. was approved as an Internet gaming provider.
(c)2012 the Las Vegas Sun (Las Vegas, Nev.)
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