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The Nevada Gaming Commission approved the restructuring and licensing of locals casino giant Station Casinos LLC from bankruptcy in a standing-room-only special meeting Thursday.
Commissioners met immediately after a 2½-hour state Gaming Control Board hearing at which the three-member board unanimously recommended approval of the application.
Commissioners voted 3-0 in favor of licensing, with Randolph Townsend unable to attend on short notice and Joe Brown abstaining because his law firm has represented Station.
The commission needed just more than an hour to deliberate, following up on some matters addressed in the Control Board hearing that they attended.
Commissioner Tony Alamo said regulators have no doubt that the Fertitta family can operate within the state’s regulatory framework because it has done it for three decades.
“It’s pretty amazing to see the Fertitta family hanging in there,” added Commissioner John Moran after listing the succession of corporate losses on the Strip and the declines in gaming revenue over the past three years.
He said one of his considerations for voting for the licensing was for all of the jobs the restructuring will save.
Commission Chairman Peter Bernhard said he thought all regulatory requirements had been met and one thing he considered was what would happen if the commission didn’t approve the licensing. The result, he said, would have been massive layoffs and closures.
At the Control Board meeting, members said they were comforted by the intense scrutiny of the company by the U.S. Bankruptcy Court and they are familiar with the Fertitta family as longtime Nevada licensees.
Through a Chapter 11 bankruptcy process, which began in July 2009, the company is shedding more than $4 billion in debt. The casinos have continued to operate through the bankruptcy process.
Gaming Commission approval formally licensed the newly structured company, which was approved by Bankruptcy Court Judge Gregg Zive in Reno on Wednesday.
Under the new entity, key lenders Deutsche Bank and JPMorgan Chase, owed $2.475 billion, would be part of the ownership group and will be represented on a managing board by Robert Cashell Jr. and Steve Greathouse, respectively. Other board members include Frank Fertitta III and Lorenzo Fertitta, sons of founder Frank Fertitta Jr., who opened the first property in 1976 as Bingo Palace.
Regulators thoroughly questioned Greathouse and Cashell and representatives of Deutsche Bank and JPMorgan Chase about compensation and fees in representing the investment firms.
Zive approved a two-step emergence process with the company taking possession of its most important properties — Palace Station, Boulder Station, Sunset Station and Red Rock Resort. The Fertittas maintained equity and management interests in those properties.
The second step involved the Fertittas and their lenders successfully bidding for 11 properties for $772 million. The deal excluded Green Valley Ranch Resort and Aliante Station, which were held out because of last-minute objections filed by lenders. The court is expected to address issues with those properties June 8. Those two properties have an additional $1 billion in debt.
The Greenspun family, owner of the Las Vegas Sun and VEGAS INC, is Station’s partner in Green Valley Ranch Resort and Aliante Station.
The board’s licensing of Green Valley Ranch Resort anticipates that differences to be argued in court would be resolved.
Unsecured bondholders, who stand to lose $2.8 billion when the debt is canceled, have complained the Fertittas’ $8.8 billion deal with Los Angeles-based Colony Capital in 2007 resulted in the company being overleveraged and billions of dollars in losses. The company responded it could not have anticipated the “global meltdown of the economy.”
Kevin Kelley, Station executive vice president and chief operating officer, told the Control Board the company has taken steps to increase business at its properties. Kelley said the company has rolled back buffet prices by 35 to 40 percent, announced plans to bring back its Grand Café brand, added 1,000 employees and launched two popular promotions, its “car-a-day” giveaway at 10 properties and its “We Love Locals” promotion. He said the company also plans to double entertainment offerings with a variety of musical genres at different properties.
The Fertitta brothers, who are investing $200 million in the deal, also addressed the Control Board.
“I feel good about the long-term viability of the company and I believe Las Vegas has a bright future,” Frank Fertitta III said.
Fertitta said the city and the company endured “a few bumps along the road,” including repercussions of the 9/11 disaster in its history, but didn’t foresee the implosion of Lehman Brothers, the stock market downturn and the city’s struggles to recover from real estate foreclosures and high unemployment.
“It was at a magnitude we had never seen in our lifetime,” he said.
Lorenzo Fertitta said the recession after the company was taken private “was a shock to the system.”
“It will be nice to get back to focusing on the business and on our customers,” he said.
More than 75 Station Casinos employees packed the Control Board hearing at the Sawyer State Office Building to support the company’s fresh start.