RP casino’s backer in financial trouble

<p>Financial reports have been coming fast and furious the last few weeks and all saying that Station Casinos, the deep pockets behind the proposed Rohnert Park casino, is in deep financial trouble.</p><!-- Nothing to do. The paragraph has already been output --><p>The once-publicly owned gaming mega-investor is over $5 billion in debt and may not be able to make required payments by Dec. 31. That could force it into bankruptcy. </p><p>The company’s woes could delay the project by several years and could allow time for an advisory measure to be placed on the ballot next year so county voters can state whether they support or oppose the casino. </p><p>Station Casinos asked its debtors on Nov. 25 to exchange their outstanding notes, paying from 6 percent to 7 percent, for smaller notes paying 10 percent interest, which would lower the company debt load and interest payments considerably. </p><p>The whole exchange will fail if 60 percent of the debt holders don’t go for it by Friday, Dec. 5.</p><p>Christopher Snow, an analyst with CreditSights in New York, and an expert on Station Casinos’ finances, said the company is in big trouble in the present economy. </p><p>“Even if they manage to get their own house in order, they are not going to get financing to build new casinos,” Snow said Tuesday. “I don’t see that project getting off the ground until there is a significant improvement in the markets,” referring to the Rohnert Park casino.</p><p>Both Standard & Poor’s and Moody’s, credit rating services, have downgraded Station Casinos’ credit worthiness after the company sought to exchange its current debt for new, offering smaller amounts of debt at higher interest rates. This type of exchange will lower debt and interest payments, but is seen as a desperate move by financial analysts.</p><p>Standard & Poor rated Station Casinos Inc. “B-Watch Negative” on Tuesday on the heels of lowering the company’s unsecured senior debt rating to single C on Nov. 26, down from a triple CCC. This reflects on the company’s ability to service debt within a year’s time.</p><p>In the same vein, Moody’s Investors Service downgraded Station Casinos’ probability of default after the company announced it was seeking a private debt exchange. </p><p>Moody’s analysts wrote there is a “high probability” Station Casinos will go bankrupt if the debt exchange doesn’t happen.</p><p>So far, there’s no rescue in sight, which is good news for those who do not want a casino built in Rohnert Park.</p><p>“If (Station Casinos) were to drop out of the project, then Graton Rancheria would have to find another partner, which means the environmental review would have to go back to the beginning,” said Marilee Montgomery, a spokesperson for Stop the Casino 101, a Rohnert Park-based group opposed to the development. “The EIR process is all about approval of the management contract.”</p><p>Montgomery acknowledges that losing its financial partner may only delay the Federated Indians of Graton Rancheria from building a casino until happier financial times, but it would be years before the project gets back on track.</p><p>The land bought by Station Casinos was accepted as sovereign tribal territory on May 7 this year and foes filed suit in Federal District Court on June 6 to stop the transfer. There has been little movement on the case.</p><p>There is also the possibility of a county-wide referendum next year on the project, though it would not be binding on federal authorities. Voters statewide will be asked to approve a plan on June 5 to sell future lottery revenues as bonds. Counties have until March 5 to add their own measures to the ballot. A majority of the Board of Supervisors will be required to put a casino referendum on the ballot. </p><p>In September, Stop the Casino 101 sent a message to all candidates in the race for Sonoma County supervisor seats in the Nov. 4 election, asking that they pledge to place a county-wide advisory measure regarding the casino on the ballot in an upcoming election.</p><p>So far, only Shirlee Zane, supervisor-elect of the 3rd District, has promised to support the referendum. Mike Kerns, who represents the 2nd District, has indicated support for an advisory measure in the past, but was not available for comment this week.</p><p>Earlier this year, Kerns brought the issue to the Board of Supervisors, and board member Mike Reilly expressed support for an advisory measure, but no action was taken because another vote from among the remaining three supervisors was necessary for passage.</p><p>People opposed to the casino say its massive size — some 760,000 square feet of casino and a 12-story hotel — will clog already crowded roads and severely strain local water supplies.</p><p>Neither Station Casinos nor the Federated Indians of Graton Rancheria responded to calls.</p><p>(Contact Jay Gamel at argus@arguscourier.com)</p>