Station reports third-quarter loss

Net revenue of $227 million fell 11.2 percent, or $28.7 million, from the prior year’s third quarter, the Las Vegas-based company reported in a regulatory filing.

"Net revenues were still down, which was not a surprise. You would expect that in this environment," said Grant Govertsen, partner and analyst with Union Gaming Group. "It’s going to be tough going for a few more quarters."

Station filed for bankruptcy in July 2009 with close to $6 billion in debt. During the court proceedings, Station reached an agreement with unsecured bondholders owed $2.8 billion.

The plan, which was approved in August by a federal bankruptcy court judge in Reno, gives creditors an ownership stake in the reconfigured company, with the Fertitta family — Frank Fertitta III and his brother Lorenzo — remaining in control.

The company is expected to emerge from bankruptcy in early 2011 with a more manageable debt of $2 billion.

For the five quarters the company has operated in Chapter 11, it has spent $454.3 million on its bankruptcy organization, according to regulatory filings with the Securities and Exchange Commission.

In its filing, the company announced gaming executives Stephen Greathouse and Robert Cashell Jr. will be joining Station as it emerges from bankruptcy.

Greathouse and Cashell are joining the "board of managers" as representatives of lenders JP Morgan Chase and Deutsche Bank, which own part of the new company.

Meanwhile, casino revenues at Station properties for the third quarter were $173.1 million, down from $182.2 million for the same period last year. Revenues generated from food and beverage were down $6.8 million to $39 million, and room revenues dropped by almost $2 million to $17.7 million in the third quarter.

Station’s major Las Vegas casino operations generated $218.1 million, down 0.6 percent from the year-ago quarter, and operating income of $57.4 million was down 0.7 percent.

Govertsen said the modest decline in revenue and income was "a very good sign that the company was managing their expenses better."

"We would like to see growth … but that’s not going to happen for a while," he said.

The company’s major properties are Palace Station, Boulder Station, Sunset Station, Red Rock Resort, Texas Station, Santa Fe Station and two Fiestas. These properties reported a loss of $104.2 million for the third quarter as compared with a loss of $24.8 million for the same period a year ago.

The company’s third-quarter earnings from its Green Valley Ranch joint venture were $1.9 million, representing 50 percent of the resort’s operating income.

For the third quarter, Green Valley Ranch generated adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — before management fees of $9.6 million, an increase of 12.9 percent compared with the same period a year ago. Green Valley Ranch reported a net loss of $9.7 million as compared with a net loss of $12.5 million for the third quarter of 2009.

The company also owns a 50 percent stake in Aliante Station and a 6.7 percent interest in the joint venture that owns the Palms.

Station’s reported management fees of $128,000 from tribal gaming during the third quarter, down from $13.2 in the 2009 quarter.

Govertsen attributed the decline to the company’s management contract with Thunder Valley Casino Resort near Sacramento, Calif., expiring during the third quarter.

With the company’s management contract at Gun Lake Casino in Michigan set to begin in February, he expected "some of that revenue to be replaced" in the first quarter of next year. Station also has potential management contracts in negotiations with four or five additional tribes.

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893.