FERTITTA-OWNED STATION CASINOS IS SUFFERING FROM DOWN ECONOMY

Life can be brutal in the desert.

Station Casinos, which is partially owned by the 90% Zuffa, LLC Owning Fertitta Brothers (Lorenzo and Frank III), is suffering tough economic times as an entity. Before I explain further, it's important to understand what Station Casinos really is, in their own words:

"Station Casinos, Inc. is the leading provider of gaming and entertainment to the residents of Las Vegas, Nevada. Station's properties are regional entertainment destinations and include various amenities, including numerous restaurants, entertainment venues, movie theaters, bowling and convention/banquet space, as well as traditional casino gaming offerings such as video poker, slot machines, table games, bingo and race and sports wagering. Station owns and operates Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Texas Station Gambling Hall & Hotel, Sunset Station Hotel & Casino, Santa Fe Station Hotel & Casino, Red Rock Casino Resort Spa, Fiesta Rancho Casino Hotel, Fiesta Henderson Casino Hotel, Wild Wild West Gambling Hall & Hotel, Wildfire Casino Rancho, Wildfire Casino Boulder, formerly known as Magic Star Casino, Gold Rush Casino and Lake Mead Casino. Station also owns a 50% interest in Green Valley Ranch Station Casino, Aliante Station Casino & Hotel, Barley's Casino & Brewing Company, The Greens and Renata's Casino in Henderson, Nevada and a 6.7% interest in the joint venture that owns the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages Thunder Valley Casino near Sacramento, California on behalf of the United Auburn Indian Community."

The business model may be just as broken as the national economy, dependent on the airs of excess and the willingness of every average Vegas visitor to let a little ride on luck. Looks like those jet setters are cutting back on their City of Sin junkets of late, looking for the cheap deals in the strip proper rather than straying to the posh, overbuilt, more modern and lavish quarters and suburban style of the newest Station Casinos developments. Maybe that's why they have to reconfigure their whole financing picture:

Station Casinos, Inc. Announces Private Exchange Offers of Its Debt Securities for New Secured Term Loans

Station Casinos downgraded after seeking debt exchange

Station Casino owners consider cash infusion

Obviously, the government isn't ever going to step in and bail out the casino industry. This a business niche that has been notorious for supporting and being directed and fueled by organized crime interests. Hence the following scene from the movie Casino:

Maybe there's some screaming matches like that going on behind the scenes in Vegas still today. Personally, I don't believe the kind of Fertitta family ties to organized crime ever just go away. I'm convinced that the phrase "clean money" has been used far too liberally to describe the successful income generating strategies of the brothers Fertitta.

Things are about to get interesting in Xyience's adversary proceeding against me in bankruptcy, as there is little time left for the opposition to make up facts to absolve themselves of responsibility for filing and pressing the frivolous claim that this whole saga began with. Xyience's frivolous case against me was meant as a method to silence me so the folks wanting to steal the company from the shareholders could get away with it. Now they almost have been able to ride off into the sunset unscathed, but I still have time to go the extra mile and fight for those interests who have been drowned out thus far in all this.

2 Responses to “FERTITTA-OWNED STATION CASINOS IS SUFFERING FROM DOWN ECONOMY”

1. xyiencesucks.com
   November 29th, 2008 @ 6:42 pm

   This is from an April, 2008 article I wrote about the Fertitta Family business:

   Recent Station financial reports reveal that there may be trouble ahead for the heavily leveraged corporation. (see http://www.secinfo.com/dVut2.t26p.htm)The reports point the finger of blame at the state of the national economy, the credit and mortgage crises, and the conditions of the merger. Here’s a snippet:

   “Our high leverage and debt service obligations could adversely affect our ability to raise additional capital to fund our operations, increase our vulnerability to general adverse economic and industry conditions, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations. As a result of the Merger, we are highly leveraged. Our ability to make scheduled payments on, or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to general economic, financial, competitive and other factors that are beyond our control. While we believe that we currently have adequate cash flows to service our indebtedness, if our economic performance were to deteriorate significantly, we may be unable to maintain a level of cash flows from operating activities sufficient to enable us to pay the principal, premium, if any, and interest on our indebtedness.”

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2. J. Jones
   December 2nd, 2008 @ 5:55 pm

   It looks like the Fertittas are at it, using their get into first position, file for bankruptcy and defraud the creditors swindle, once again.

   In the Station Casinos November 25th press release, “Station Casinos, Inc. Announces Private Exchange Offers of Its Debt Securities for New Secured Term Loans,” the most important passages are: “Concurrently with the issuance of the Term Loans, the Company would borrow between $450 and $500 million from entities affiliated with existing equity owners of the Company or institutions or persons who are investors in related entities that currently own an indirect economic interest in the Company (the "Sponsors").” And “The lien securing the Term Loans will be junior to the liens securing the Company's obligations under its senior secured credit facility and the $450 million to $500 million of Sponsor loans.” The Fertittas are 24.1% ”existiing equity owners” in Station Casinos and the Fertittas are the “Sponsors.”

   One only has to go back to October 2007 when another financially struggling company received a similar funding of from a group of “existing equity owners” and “investors in related entities that currently own an indirect economic interest in the Company.” That company was Xyience Incorporated, the “existing equity investors” and “related entities” were the Fertittas and entities controlled by and related to the Fertittas.

   In this instance, according to a press release issued on October 10, 2007 by Bill Bullard Secretary of Fertitta Enterprises, Dana White President of the UFC and Adam Frank CEO of Xyience, “Xyience announced that the company has received access to up to $12 million in a strategic funding effort from a group of investors. The company intends to use a significant portion of the investment to expand distribution of its Xenergy brand energy drink.” The group of investors, “Zyen LLC,” was headed by Fertitta Enterprises. The proceeds from the Feritta “Zyen” funding, which were controlled by Bill Bullard, did not go to expand distribution of Xyience products as stated in the press release. Instead, the funds went to pay entities controlled by the Fertittas, namely the UFC, Fertitta Enterprises and the Fertittas’ cronies, ARC Investment Partners, Adam Roseman, Kirk Sanford, Adam Frank and their attorneys, Eisner and Frank, Hunterton and Associates and Fennemore Craig. Similarly, the existing Xyience debt was made junior to the $12 million Fertitta “Zyen” funding, just as the existing Station Casinos Term Loans would be made junior to the Fertitta “Sponsor loans.”

   In the Xyience case, after a majority of the funds went to pay entities controlled by the Fertittas, Bill Bullard, who controlled the use of the proceeds of the funding, did not make the first $150,000 November 2007 interest payment on the Fertitta “Zyen” loan. Bullard then foreclosed on the loan on December 4, 2007, two months after the loan was made, bankrupting Xyience and wiping out the Xyience creditors who had just subordinated to the Fertitta “Zyen” loan. Now Xyience is owned by ManZen LLC, an entity controlled by the Fertittas. The Xyience creditors and shareholders have been left with nothing.

   Station Casinos creditors should be very wary of subordinating their notes to any debt instrument put forward by the Fertittas or any entities associated with the Fertittas. Leopards never change their spots. These leopards are waiting in the grass for the Station Casinos creditors to subordinate, ready to pounce on them with foreclosure and bankruptcy, just as they did to Xyience creditors one year ago.

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