Inside Gaming: Station Bankruptcy Saga Over, Palms Ownership Shakeup, and More



This week, Inside Gaming gives you a rundown of what’s new in casino finance. Station Casinos is finally out of bankruptcy, and the Palms is avoiding it with some dramatic ownership changes. Ohio racetrack purchases are looking like golden gooses after the state approved the addition of video lottery terminals. Boyd Gaming is trying to spin its Mississippi casino purchase as being similarly brilliant, but analysts aren’t quite convinced.

Station Casinos Emerges from Drama-Filled Bankruptcy

Station Casinos announced last week that two years after filing for Chapter 11 reorganization, the company is out of bankruptcy. Judge Gregg Zive and Nevada state casino regulators finished approving the reorganization plan after months of hearings, protests, and complaints. Station’s founding family, the Fertittas (yes, the ones who own the UFC), managed to retain control of all but one of the company’s properties. CEO Frank Fertitta III and his brother Lorenzo invested close to $200 million of private capital in the reorganization plan and maintain a 45 percent stake in the company.

Creditors took over Aliante Station in North Las Vegas in exchange for writing off $378 million of Station’s debt. In total, the reorganization deal is believed to have reduced Station’s $6.86 billion debt by more than $4 billion while leaving the company in possession of 17 local-facing properties, four tribal development or management agreements, and several other land holdings.

"We are pleased to have completed the restructuring process and we look forward to this exciting new chapter in the Station Casinos story," Frank Fertitta III said in a statement. "Lorenzo and I believe in the future of Las Vegas, which is why we remain committed to the company and the community."

Get more details from VegasInc.

Palms Restructures Debt, Leaving Maloofs with Little Equity and Caesars’ Parent with Nearly Half

The Palms Hotel and Casino offloaded much of its debt last week to TPG Capital, which owns Caesars Entertainment Corp., and to Leonard Green & Partners LP. The Maloof family originally declined to comment on how much control they would maintain in the Las Vegas casino, simply telling the Las Vegas Review-Journal they "have an equity stake in the Palms." But since the state gaming commission has to approve the details of any deal resulting in new ownership of a casino, the Maloofs were only buying themselves a few days of cover.

It took less than a week for the company’s regulatory filings with Nevada gaming to reveal that the Maloof family is down to just 2 percent ownership of the ailing property. Leonard Green & Partners and TPG Capital will each assume 49 percent of the Palms, a resort advertised as a celebrity hangout and frequently featured on E! and MTV television shows. The Maloofs also own the NBA’s Sacramento Kings, a less-than-robust franchise that has looked to relocate to Las Vegas or Anaheim, Calif. The Maloofs said their reduced ownership in the Palms improves their financial situation, possibly enabling them to contribute more than expected to an under-negotiation new arena for the Kings.

Learn more about the reorganization at

Casino Operators/Slot Manufacturers to Benefit from Ohio Racetrack Expansions

Recent risky investments in Ohio racetracks look like brilliant moves for several casino companies after Ohio Gov. John Kasich announced last week that the state’s seven tracks can add casinos with video lottery terminals. The new deal will allow track operators to buy a 10-year casino operating license for $50 million, provided they invest a minimum of $150 million per location and pay 33.5 percent tax on video lottery revenues.

Las Vegas-based Pinnacle Entertainment spent $45 million on River Downs Racetrack in Cincinnati last year in the hopes that they’d soon be able to add a casino. The new gaming venue adds another dimension to Pinnacle’s recent expansion into new markets, including Louisiana and Vietnam, a strategy about which investment analysts are optimistic.

Penn National Gaming owns two Ohio tracks; Caesars Entertainment Corp. and MTR Gaming each operate one. Penn National and Caesars are also each building two full-scale casinos in Ohio. The video lottery terminal ruling is also good news for slot-machine manufacturers who will have an estimated 10,500 to 17,500 new orders to fill.

To hear more analyst perspectives, check out the Casino City Times.

Boyd Gaming Purchases Mississippi IP

Boyd Gaming Corp. continued its campaign to reorganize its portfolio and impress investors by acquiring the IP Casino Resort Spa in Biloxi, Miss. for $332 million. Boyd is paying $278 million to the casino’s current owners, Imperial Palace of Mississippi LLC and Key Largo Holdings LLC, donating $10 million to the affiliated Engelstad Family Family Foundation charity and setting aside $44 million for renovations. The Engelstad Family Foundation sold the Las Vegas Imperial Palace to Caesars Entertainment (then Harrah’s) in 2005. Boyd is expected to borrow around $200 of the $332 million.

In return for its investment, Boyd gets 1,100 recently remodeled hotel rooms, a 70,000-square-foot casino, 73,000 square feet of convention space, a spa, theater, 14 restaurants and lounges, and an additional 13 acres of vacant land on which to expand.

Some analysts applauded the move, some questioned the percentage of its cash Boyd was investing in "a no-growth market," and others were more interested in how it impacted the company’s on-again-off-again interest in buying MGM International‘s stake in the Borgata in Atlantic City.

Read Boyd’s spin on it in this press release, and get the analysts’ takes in the Las Vegas Review-Journal.

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