March 25, 2010 / 3:53 PM / 9 years ago

UPDATE 1-Station Casinos files reorganization plan

* Sees Chapter 11 exit before the end of the year

* Plan must be approved by bankruptcy court

March 25 (Reuters) - Bankrupt Station Casinos [STN.UL] has filed a reorganization plan with a Nevada bankruptcy court and expects to emerge from Chapter 11 protection before the end of the year, the company said on Thursday.

In a regulatory filing with the U.S. Securities and Exchange Commission, Station said mortgage lenders holding debt secured by Red Rock Casino Resort Spa, Palace Station, Boulder Station and Sunset Station will become the equity owners of a newly-formed company.

The lenders will sell 46 percent of the equity to co-owner and Chief Executive Frank Fertitta and his brother, Lorenzo Fertitta, who will make a “significant new investment” to buy their equity in the new company, the filing said.

Colony Capital will also be making a new investment in the company under the proposed plan, which also calls for Station to conduct a court-supervised sale process for its remaining assets.

The plan must be approved by the bankruptcy court and is subject to further negotiations with stakeholders, Station said.

The company was pushed into bankruptcy last July after months of negotiations with lenders that failed to ease the debt burden brought on when it was taken private in 2007 by the Fertittas and Colony Capital.

Station operates casinos catering to Las Vegas residents rather than tourists.

The case is In re: Station Casinos Inc, United States Bankruptcy Court, District of Nevada, No. 09-52477. (Reporting by Santosh Nadgir in Bangalore; editing by John Wallace)

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