CARSON CITY - A complex $8.9 billion stock buyout-debt assumption of Station Casinos by members of its founding Las Vegas family and real estate investment firm Colony Capital was endorsed Thursday by the Nevada Gaming Control Board.
Under the takeover deal, brothers Frank Fertitta III and Lorenzo Fertitta, top executives of Station Casinos Inc. are joining with California-based Colony to form Fertitta Colony Partners, which will take over Station's 12 casinos in the Las Vegas area and other interests.
The buyout includes a nearly $5.5 billion offer for Station stock, at $90 a share, plus an assumption of $3.4 billion in debt. It's the largest private-equity buyout yet of a Nevada gambling company. Stockholders approved the plan in mid-August.
While Control Board Chairman Dennis Neilander said the deal will result in a new entity that's "significantly more leveraged" than Station Casinos Inc., he voted for the plan because of Station's high cash flow history and extensive land holdings that could be used as collateral for additional funds.
The board's unanimous recommendation goes to its parent state Gaming Commission, which will have final say at an Oct. 18 meeting. The takeover also is subject to approval by the National Indian Gaming Commission since Station manages a major Indian resort, Thunder Valley Casino, near Sacramento, Calif.
Lorenzo Fertitta told the Control Board that the move from a public to a mostly private business enables the new company to move quickly on various projects and developments now in the works and not have to deal with cautious shareholders who might object.
Tom Barrack, Colony Capital chairman and chief executive officer, said the current mortgage crisis has created confusion but doesn't have an impact on private equities, which he said are at an all-time high.
Barrack also said the Fertittas' willingness to invest so much of their own capital in the venture makes the deal attractive. Given that willingness, "everything else pales" in comparison, he said.
The Fertittas and Barrack will serve as the new company's directors. Barrack holds a Nevada gambling license through Colony Capital's $280 million purchase of the Las Vegas Hilton in 2003.
The Fertittas will get nearly $300 million for some of their stock options and shares in Station Casinos Inc. They and their sister, Delise Sartini and her husband Blake, will swap other Station stock options and shares for a 25 percent interest in the new company. Colony will hold a 75 percent interest.
The Fertittas' father started Station Casinos in 1976, and Frank Fertitta III has been chairman and chief executive officer since the company went public in 1993. Lorenzo Fertitta has been company president since 2000.