Station Casinos skips interest payment on 7¾% senior notes; bondholders file lawsuit

By Caroline Salls

Pittsburgh, Feb. 17 - Station Casinos, Inc. elected not to make a scheduled $15.5 million interest payment due Feb. 15 on its $400 million of 7¾% senior notes due Aug. 15, 2016, according to an 8-K filed with the Securities and Exchange Commission.

As previously reported, the company also elected not to make the $14.6 million interest payment due Feb. 1 on its $450 million of 6½% senior subordinated notes due Feb. 1, 2014.

Station said the payment grace period expires on March 3 in connection with the 2014 subordinated notes and March 17 on the 2016 senior notes.

In addition, the company said a lawsuit was filed on Feb. 12 in the U.S. District Court for the District of Nevada under which some holders of the company's outstanding senior and senior subordinated notes allege unfair discrimination in connection with Station's pending solicitation of ballots in favor of a proposed plan of reorganization.

According to the 8-K, the plaintiffs allege that the solicitation is an exchange offer that will give a limited number of noteholders the opportunity to obtain new notes, which will be senior to the outstanding notes.

The lawsuit names the company, its directors and some of its executive officers as defendants.

Station Casinos said it believes the lawsuit is without merit because all holders of its outstanding senior notes and senior subordinated notes would receive the same consideration under the proposed plan of reorganization regardless of whether they were eligible to participate in the plan vote solicitation.

The company said no old notes would remain outstanding after the proposed plan took effect.

Also, Station Casinos said the Michigan senate passed a resolution on Feb. 11 approving a compact between the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians and the state of Michigan.

The company said the compact allows the tribe to offer class III gaming and outlines the details of revenue sharing. Station Casinos said it is party to agreements with the tribe under which the company will develop and manage a casino for the tribe.

Station is a Las Vegas-based casino company.

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