UPDATED x2: Boyd Gaming To Make Play For Station Casinos Assets

Comments

February 23, 2009 1:55 PM Posted by detroit1051

Less than $1 Billion? How much would Green Valley Ranch be worth in normal times?
http://boydgaming.mediaroom.com/index.php?s=43&item=28

February 23, 2009 2:07 PM Posted by Las Vegas USA

That seems like a pretty risky purchase to make in these strange times. They must have some really great plans for it.

February 23, 2009 2:45 PM Posted by parchedearth

Boyd must figure they are never going to finish Echelon since that's where their $2B line of credit came from. This is a very risky move for Boyd. I would guess they are looking at a ratings downgrade if they don't increase their cash flow to service the interest on the debt already incurred on Echelon. They need to sell properties and pay down debt, not acquire more.

February 23, 2009 3:22 PM Posted by David McKee

The R-J has it right, the Sun wrong: both properties that are jointly owned with Greenspun are included (GVR & Aliante); Boyd is only bidding for Station's half-interest in those, not Greenspun's. Four other Station properties are encumbered with a mortgage and are therefore excluded from the present offer. I suspect the real audience for this offer is Station's creditors.

February 23, 2009 5:05 PM Posted by Jeff in OKC

I think this is a great move by Boyd. It would make them dominant in the locals market at a good price, if it goes through. If it doesn't, it forces Station to pay their debts as they come due in the future, instead of getting that 90% discount on some of their bonds that they are currently trying to lock up.

February 23, 2009 5:28 PM Posted by Jeff Simpson

Actually, neither paper's first effort was correct. The deal includes the Station half interest in GVR and Aliante Station (and the smaller neighborhood casinos Station and Greenspun Corp. own), left out of the Sun's first post; Texas Station, Santa Fe Station, left out of the initial R-J post; Wild Wild West and the Fiestas. Still unknown as of now is whether the offer includes Station's tribal operating deals.

While the letter from Boyd to Station may be friendly in tone, this is not a friendly offer. Chances of Station accepting the offer at $950 million: Zero. But there's pleny of room for negotiation, and the creditors and Colony's dire straights put Station and the Fertittas, I think, between a (Red) Rock and a hard place.

February 23, 2009 6:13 PM Posted by Hunter

I agree with Jeff - this is *not* friendly.

This is Boyd seeing an opportunity and trying to seize it. The fact they have cash to deal with gives them even better chances of securing some of these assets.

February 23, 2009 6:27 PM Posted by Michigan Dysfunctional

If the Tribal deals are included, this would be very interesting as the now Boyd owned Blue Chip Casino in Michigan City, Indiana was at one time rumored to be the funding source of lobbyists blocking the Gun Lake Tribe from opening a casino in Wayland Twp, Michigan. Station Casinos has a management agreement in place to run that casino once it opens in early 2010. After suffering a reported 40% decrease in business at Blue Chip after the opening last year of Four Winds Casino (Pokagon Band/Lakes Entertainemnt) Boyd could box them in competitively speaking with Blue Chip and Gun Lake which would be interesting to us Gaming fans here in Michigan/Northern Indiana.

February 24, 2009 6:04 AM Posted by Matthew Farley

I find this to be an interesting event in a couple of ways:

1. Boyd seems to me as if they are making a wise move. They have consistently been successful in the past running locals casinos, which is the business they are looking at expanding via the Station offer. Their albatross at the moment is Echelon, which is a big 'question mark' for Boyd since they are more of a locals operator and do not have a track record that includes a successful strip mega-resort. If they are diverting investment from. Assuming that their operations of the Station properties is profitable in the near-term, the additional properties should generate cash that would come in useful for the completion of Echelon as the economy recovers in the years to come.

2. This is a sign of what I see as a curiously inverted version of what is happening on the strip (with the sale of Treasure Island, etc). While diversification of ownership appears to be happening on the strip, a purchase like this by Boyd would represent a consolidation of ownership of off-strip properties, making the grand majority of large off-strip casinos Boyd-owned.

February 24, 2009 12:27 PM Posted by David McKee

The Thunder Valley management would be part of the deal, according to J.P. Morgan, which lowers the EBITDA multiple of the purchase offer, at least in the short run. It stands to reason that the Michigan arrangement would also fall under the terms of offer, in which case it would be a brilliant way of recovering some of the business that Blue Chip either lost already or stands to lose if more tribal casinos open in Michigan.

No, this is not a friendly offer and, by promulgating the letter to Fertitta so widely (doing everything short of hiring a plane to sky-write it), Boyd is rubbing Frank's nose in it.

March 3, 2009 10:02 AM Posted by Mark D