Stations Casino Files for Bankruptcy

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By TAMARA AUDI, www.wsj.com

Las Vegas-based Station Casinos Inc. filed for bankruptcy protection Tuesday, making it the latest casualty in the recession-wracked gambling industry.

Despite months of haggling, the company failed to reach a prearranged agreement with all its lenders. Bondholders control $2.3 billion of the company's $5.7 billion in debt.

The company's 18 casinos are separate entities wholly owned by Station and aren't part of the bankruptcy filing. They will continue to operate as usual, a Station official said. All of the debt is held by the parent company.

However, senior secured lenders did agree to allow the parent company to borrow up to $150 million from its noncasino subsidiaries, according to a filing with the Securities and Exchange Commission.

The lack of an accord with bondholders could mean a long haul in bankruptcy court. But "all the lenders are on board" with the move to file, said Station Chief Accounting Officer Tom Friel.

After months of negotiations with no formal pact, Mr. Friel said "we feel it's helpful to have the formal court process to resolve some of the issues. You've got a whole bunch of different constituencies who have a bunch of agendas on how they want the world to be. This will hopefully help us move closer to getting a deal done," he said in an interview.

Station is the latest victim of a gambling industry bled by borrowing and a prolonged slump in consumer spending. Already this year, a number of smaller casino companies, including the Las Vegas Tropicana and Trump Entertainment Resorts in Atlantic City, filed for bankruptcy.

Meanwhile, larger companies like Las Vegas Sands Corp., MGM Mirage and Harrah's Entertainment Inc., struggled to reduce debt and slash costs as tourism and corporate spending shrank.

The Station filing marks the financial downfall of one of the oldest and best-known casino companies in Nevada, and a stark reversal of fortune for its founding family, the Fertittas.

The company, founded in 1976 with one casino, expanded by catering to locals who worked or lived in the Las Vegas area. Its Western-themed properties, with names like Gold Rush Casino and Texas Station Gambling Hall and Hotel, are aimed at budget-minded gamblers.

In recent years, as Las Vegas began catering to luxury travelers with more lavish offerings, Station opened several high-end resort casinos off the Las Vegas Strip.

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