Wednesday, March 18, 2009

And the dominoes begin to fall

After months upon months of reporting that almost every major gaming company was on the brink of bankruptcy, the first has finally declared.

Arnold Knightly of the Review-Journal posted a piece a few hours ago indicating that the locals-joint king Station Casinos plans to file by April 15. MGM Mirage, Las Vegas Sands and Harrah's also are teetering on the brink. (I don't count Herbst Gaming and Tropicana Entertainment as a major interest upon whose fate Las Vegas as a whole depends, but technically they were first to bankruptcy, I suppose.)

Wynn and Boyd appear to be stable for the time being and Boyd, of course, is still in the market to buy Station assets. One wonders if Station ought to swallow its pride and take the $950 million or wait it out and give away more for less. It's not like revenues are going to get much better in the coming months.


Anonymous said...

The issue for Station isn't pride. It is what is going to come out of the bankruptcy in terms of an operating entity. Here is where the interests of management and the investors will clash, and will be decided in front of a judge. If Boyds offers its creditors (the fulcrum class - those who get equity) something the creditors prefer say cash now vs. equity in a reorganized Stations, than Boyds will prevail. Stations, however, will have some options including selling off some properties if they can find buyers in order to reduce the debt and make them more viable coming out of bankruptcy (viability will be based on the dollars received contrasted with how much cash flow from the sale of the properties in contrast how much cash flow those properties generate). If Boyds is patient and MGM creditors are not, Boyd might get the Bellagio and not have to worry about Echelon.


Anonymous said...

Four Station properties (including Red Rock) are encumbered with $2.5 billion in mortgage-backed securities. So any prospective buyer of them has to ask themselves whether those four casinos are generating enough revenue to support that debt load (unless you buy ALL of Station and spread the risk). At this time, the answer would be, "No."

David McKee