Station Casinos discusses ruling in favor of the Auburn Indian Community and other development plans
Las Vegas – Station Casinos, Inc. (NYSE: STN) (“Station” or the
“Company”) announced today that the United States District Court for
the District of Columbia (the “Court”) ruled in favor of the Department
of the Interior and the United Auburn Indian Community (the “UAIC”) and
granted the Department of the Interior’s and UAIC’s motions for summary
judgment, resulting in the dismissal of the claims challenging the
Department of the Interior’s decision to accept land into trust for the
benefit of the UAIC. The Court however, stayed entry of its final order
for a period of 48 hours to allow the Plaintiffs to seek a stay of the
Court’s order pending any appeal. Unless such a stay is granted, the
Court’s decision clears the way for the Department of the Interior to
act on its March 15, 2002, decision to take the land into trust.
The land to be taken into trust is a 49-acre parcel located
approximately 7 miles north of Interstate 80 in Placer County,
California, in the Sacramento Metropolitan area. Pursuant to the terms
of the Development Services and Management Agreements entered into by
Station and the UAIC, and subject to compliance with the terms of a
Memorandum of Understanding entered into by the UAIC and Placer County
concerning the development of the project, the Company and the UAIC
intend to develop Thunder Valley Station Casino on the 49-acre
parcel.
Thunder Valley Station Casino is planned to be an approximately 200,000
square-foot facility, which will reflect certain influences of the
UAIC, including various water and fire features. It is anticipated that
the casino will house between 1,250 and 2,000 slot machines and 100
table games, including a private VIP gaming area. The facility will
have numerous dining and entertainment amenities, including a center
pit bar, a 1200-seat showroom, three specialty restaurants, a 500-seat
buffet, a food court, and parking for 3,000 vehicles. The Company
estimates that the facility will open during the second half of 2003
and anticipates the cost of the project to be approximately $215
million. The Company and the UAIC intend to finance the project through
a group of bank lenders, with the Company providing a completion
guaranty and credit support.
Other Development - Summerlin Project In July 2002, the Company
announced that it had entered into an agreement that gives it the right
to acquire approximately 73 acres of land in the Summerlin
master-planned community, in Las Vegas, Nevada. The land is located on
Charleston Boulevard at the Interstate-215/Charleston interchange. The
purchase price for the property is $65 million. The agreement calls for
a due diligence period which expires in October 2002, at which time the
Company expects to make a payment of $6.4 million which will be fully
applicable to the purchase price. Subject to the satisfactory
completion of its due diligence, the Company anticipates closing the
purchase of the property during the second quarter of 2003.
The Company has not yet determined the timing of the project, which is
dependent on a number of variables, including the final determination
of the project scope and budget, as well as the Company’s leverage
ratios. “We are very excited about this opportunity,” stated Glenn
Christenson, Executive Vice President and Chief Financial Officer. “As
a result of our excellent position in the market, the project’s timing
is completely in our control. In the past we have constructed new
projects and expanded existing facilities on an accelerated timeframe
to meet strategic objectives. This project is different in that the
competitive landscape on the west side of town will not be measurably
affected by our competitors in the future because we own the three
sites that can be developed.” The Company has repeatedly stated that
its strategy is to focus on operations, maintain flexibility in its
capital structure, shrink its capital base, and take a balanced
approach to growth. “We intend to shrink the capital base primarily by
reducing debt,” stated Christenson. “However, we may also shrink our
capital base through our approved share repurchase program. As part of
our balanced approach to growth, we don’t intend to commence
construction on the Summerlin project until we believe we will be able
to maintain a leverage ratio (Debt divided by Earnings before Interest,
Taxes, Depreciation, and Amortization (“EBITDA”)) of approximately 4.5
times or less throughout the construction process,” stated Christenson.
“Once the project opens, the leverage ratio should reduce quickly as
the EBITDA from the Summerlin project will be added to that
calculation.”
The Summerlin project will be part of Summerlin Centre, which is being
developed by the Howard Hughes Corporation. In addition to the
Company’s planned resort/casino, Summerlin Centre will include an
eight-acre Central Park, a 1.5 million square foot regional retail
center, an office district encompassing more than 2 million square feet
of mid- and high-rise buildings, a high density urban residential
district, and two traditional suburban residential districts offering
both single- and multi-family housing.
Station Casinos, Inc. is the leading provider of gaming and
entertainment to the residents of Las Vegas, Nevada. Station’s
properties are regional entertainment destinations and include various
amenities, including numerous restaurants, entertainment venues, movie
theaters, bowling, and convention/banquet space, as well as traditional
casino gaming offerings such as video poker, slot machines, table
games, bingo and race and sports wagering. Station owns and operates
Palace Station Hotel & Casino, Boulder Station Hotel & Casino,
Santa Fe Station Hotel & Casino and Wild Wild West Gambling Hall
& Hotel in Las Vegas, Nevada, Texas Station Gambling Hall &
Hotel and Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and
Sunset Station Hotel & Casino and Fiesta Henderson Casino Hotel
(formerly The Reserve) in Henderson, Nevada. Station also owns a 50
percent interest in both Barley’s Casino & Brewing Company and
Green Valley Ranch Station Casino in Henderson, Nevada.
This press release contains certain forward-looking statements with
respect to the business, financial condition, results of operations,
dispositions, acquisitions, and expansion projects of the Company and
its subsidiaries which involve risks and uncertainties including, but
not limited to: financial market risks, the ability to maintain
existing management, integration of acquisitions, competition within
the gaming industry, the cyclical nature of the hotel business and
gaming business, economic conditions, regulatory matters and litigation
and other risks described in the filings of the Company with the
Securities and Exchange Commission, including, but not limited to the
Company’s Annual Report on Form 10-K for the year ended December 31,
2001, and its Registration Statement on Form S-4 File No. 333-66140.
There can be no assurance that the Company will ultimately acquire the
property in Summerlin described above. Construction projects, such as
Thunder Valley Casino and the Summerlin project described above, entail
significant risks, including shortages of materials or skilled labor,
unforeseen regulatory problems, work stoppages, weather interference,
floods and unanticipated cost increases. The anticipated costs and
construction periods are based on budgets, conceptual design documents
and construction schedule estimates. There can be no assurance that
these budgeted costs or construction periods will be met. The Company
has not entered into financing arrangements for either Thunder Valley
Casino or the Summerlin project, and there can be no assurance that
such financing will be available to the Company on acceptable terms, if
at all. Additional financial information, including presentations from
recent investor conferences and its Registration Statement, is
available in the “Investors” section of the Company’s website at
www.stationcasinos.com.
