n a nonbinding offer issued last month, Las Vegas-based Boyd Corporation declared that it "is uniquely qualified to operate the assets of Station," a privately held company.
In a new letter made public Monday, Boyd said that Station "has not engaged ... in any discussion regarding the company’s proposal, nor has it provided any information that would enable Boyd Gaming to consider submitting a binding proposal."
Still, management "remains committed to pursuing a transaction to acquire some or all of the assets of Station, and is prepared to work with Station in a timely fashion to prepare a formal proposal," Boyd wrote in the letter.
The company claims to have sufficient liquidity to finance the deal and said that "the necessary regulatory and governmental approvals could be obtained in a timely manner."
In its initial response to the bid, Station said that it’s been working "with our lenders and bondholders to pursue our previously proposed plan of reorganization, but we will evaluate the terms of Boyd Gaming’s proposal."
But it later sent a letter to Boyd, rejecting the idea of takeover talks and saying it would stick with the reorganization plan. Two years ago, Station was taken private in a us$ 5.4 billion leveraged buyout led by management that put the company under the control of the Fertitta family and Colony Capital. But it recently announced it may have to file for bankruptcy protection if it can’t nail down an agreement with bondholders to cut about us$ 1.3 billion off its us$ 2.3 billion in existing debt.
Both Boyd and Station cater primarily to the Las Vegas "locals" market, although Boyd owns some "riverboat" casinos in the South and Midwest, and manages the Borgata in Atlantic City as part of a joint venture with MGM Mirage
The locals market has suffered right along with the properties on the Las Vegas Strip as the recession has meant sharp declines in gambling revenue, room rates and occupancy levels. Shares of most casino companies trade at a mere fraction of where they were little more than a year ago - with some having lost as much as 90% of their value.
Still, should the company acquire Station, Boyd would have a virtual hammerlock on the once-lucrative Las Vegas locals market when and if it turns around. Shares of Boyd traded up nearly 7% in morning action, and recently traded 3.5% higher to us$ 3.21.