Station Casinos on Path to IPO

After a fantastic 2014, which saw Station Casinos haul in nearly $1.3 billion in revenue, many are speculating the company may go public next June, five years after a restructuring deal, even though CFO Marc Falcone (l.) downplayed the possibility.

After Station Casinos experienced a strong finish to 2014, many have come around to believe the locals gaming market has revived. During a Station Casinos’ fourth-quarter earnings conference call recently, the question arose on whether the company would be traded publicly once again.

Station Casinos CFO Marc Falcone deflected the question as best as he could, but left many to believe this may in fact happen in the near future. Former owners of the Cosmopolitan hotel Deutsche Bank owns 25 percent of Station Casinos, a result of a June 11 reorganization of Station Casinos which helped them out of bankruptcy.

In addition to making way with some $4 billion in debt which hung over the company, it also gave the bank an option to place Station Casinos into an Initial Public Offering on June 2016. Station’s founders Frank Fertitta III and Lorenzo Fertitta retained 45 percent of ownership due to a $200 million investment the brothers put into the company.

A mere year later, JPMorgan Chase & Co.’s ownership stake was bought out by the Fertittas for $73 million, leaving them with a controlling 58 percent ownership. Falcone said, “The equity investors have been great partners. We’ve enjoyed being their partner, and we think they’re all happy with the performance of the company since we’ve changed the restructuring. I don’t really anticipate any change.”

Deutsche Bank could see a better return on investment with an IPO providing the sale and purchase of stock in Station Casinos. The company’s net income was $83.3 million for the year, which was fantastic news after a losing 2013. The company’s long term debt was reduced $70.1 million over the year to $2.1 billion.

In 1993, Station Casinos went public, and had shares traded for 14 years on the New York Stock Exchange. In 2007, A $5 billion buyout between the Fertittas and Colony Capital took the gaming company private. Only two years later the company filed bankruptcy with $5.9 billion in debt.

Station, like many others, were quick to blame the economic collapse of Las Vegas, while many analysts pointed to the company’s high development costs such as the $925 million Red Rock Resort and $662 million Aliante Station. Stations are hoping the past is behind them, and they have good reason to believe that, with 15 consecutive quarters of cash flow growth, and $1.29 billion in net revenue for 2014, their highest since 2008.