Station Casinos bondholders anticipating a debt-for-debt exchange, portfolio manager says

By Paul A. Harris

St. Louis, July 23 - Holders of Station Casinos Inc. bonds are speculating that the company is going to initiate a debt-for-debt exchange, according to a high-yield mutual fund manager who spoke Wednesday on background.

The investor added that Station Casino's subordinated bonds are trading up and the senior bonds are trading lower, which would be expected in a debt-for-debt exchange scenario.

The source said that the Station Casinos Inc. 6½% senior subordinated notes due Feb. 1, 2014 were at 53 bid, 55 offered, late Wednesday, up from 48 bid on July 16, whereas the 7¾% senior notes due Aug. 15, 2016 were at 73 bid, 74 offered late Wednesday, down from 75½ bid on July 16.

Noting that Station Casinos was acquired in an $8.8 billion LBO by Fertitta Colony Partners LLC in early November 2007, the fund manager said that the company will definitely require approval from its senior secured bank loan lenders in order to do the exchange.

It is not clear whether senior bondholder approval would be required, the source added.

The company did not immediately return a Wednesday evening telephone call from Prospect News seeking comment.

Station Casinos is a Las Vegas-based gaming and entertainment company.

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