NEW YORK (Reuters) – Station Casinos missed an interest payment on its debt and said it may consider filing for bankruptcy under Chapter 11 as part of a restructuring plan, as the deepening U.S. recession batters the gaming sector.
The company, which owns 13 casinos and gaming centres and operates a number of others, mainly in Las Vegas, also said it expects fourth-quarter revenue to fall 19 percent to $290 million.
Station Casinos said it had decided not to make a scheduled $14.6 million interest payment because it is launching the proposed restructuring plan.
If enough bond holders accept the plan, the company said it may decide to implement the reorganisation under Chapter 11.
A company normally has 30 days after an interest payment is due to make the payment and “cure” the default.
The failure to make an interest payment on its debt is a possible sign that the casino operator may be considering a bankruptcy filing, research firm KDP Investment Advisors had said earlier on Tuesday.
“We were not surprised by this, given that the company failed to receive amendments to its bank agreement and failed to achieve a below par exchange with resistant bondholders,” KDP analyst Barbara Cappaert said in a report.
The company’s bondholders in December refused to accept terms of a proposed debt exchange, causing the company to terminate the offer.
The casino operator, which has been struggling with its debt load following a management-led buyout in 2007, said the purpose of the restructuring plan is to significantly reduce debt and interest expenses.
Affiliates of the Fertitta family and Colony Capital have committed, as part of the restructuring plan, to contribute in the aggregate up to $244 million in cash if an acceptable agreement is reached, Station Casinos said in a statement.
(Reporting by Karen Brettell in New York and Bhaswati Mukhopadhyay in Banglore; Editing by Leslie Adler)