Could Station go public?; Straub buys Revel again

Station Casinos is doing as well as it ever has since the Great Recession, fueling speculation that an IPO might be on the way. Granted, this is mostly speculation by investors and the media but Deutsche Bank‘s 25% stake in the locals-casino company gives it the option to initiate a public offering in June 2016. CFO Marc Falcone is trying to douse the fire, saying, “We’ve enjoyed being their partner, and we think they’re all happy with the performance of the company since we’ve emerged from the restructuring. I don’t really anticipate any change.”

But an IPO would make a lot of sense (a lot more than going private ever did). The capital it would raise could give Station the wherewithal to resume some of the many projects that had to be abandoned during the crisis — although we don’t mean $11 billion Viva. Eternally deferred Durango Station could finally be built. And if the Fertitta brothers feel like going up against Michael Gaughan (not a challenge for the faint of heart), the could revive their Texas Avenue project, just south of South Point. Maybe, someday, they could retire Palace Station — a crowded and confusing warren of ad hoc extensions — in favor of something more state of the art. Right now the company’s focus is on its two premium properties, spending $55 million on facelifts at Green Valley Ranch Station and Red Rock Resort.

Long-term debt is a manageable $2.1 billion and, according to Falcone, all economic indicators are point in the right direction for continued recovery by Station. And don’t forget that the company’s 1993 growth spurt was the fruit of an initial public offering. Another IPO? Why not?

* Another day, another Revel purchase by Glenn Straub. Not being able to close on the last purchase agreement cost Revel $13 million-plus, as Straub will get the giant megaresort for $82 million, the lowest price offered yet, and he’s already forked over the cash (less his $10 million deposit). His comment on the future, “Clearly, with two bankruptcy filings in less than two years, the Revel Hotel & Casino is in need of innovative management,” is no less true for being obvious. Despite Revel ownership’s claim of prospective buyers on the horizon, Straub must have had them over a barrel, judging by their quickness to knock the price down. “We’re buying what we originally intended to buy, and the dollar figure will reflect that,” Straub told the Wall Street Journal. Lucky for him, bankruptcy court Judge Gloria Burns hadn’t yet affixed her signature to the dissolution order of the previous Straub/Revel deal, making this chestnuts-from-the-fire rescue possible.

Straub says he’ll invest $100 million in making the building’s exterior bigger (Why?) and the lobby easier to access. An additional $50 million will be plowed into a “medical-health spa.” He also alluded to a three-year plan whereby “quality of life and sports will help change the image of Atlantic City from a predominately gaming destination back to a world-renowned resort town.”

The vexing question of how to deal with Revel’s tenants — Straub wants them out and they want to stay put — is simply begged. We’ll probably be hearing a lot more on that before the deal closes (if it does) on March 31. For now, Straub is dickering with them “with an eye toward being open and operational for the [summer] season.” he also says, “Polo North is working diligently with its team to finalize an operational plan for the property to be successful, not just ‘business as normal,’ as was done in the past.” It’s not clear what he means by that, as Revel’s deviation from Atlantic City norms played a major role in its downfall.

Straub attorney Stuart Moskowitz said Polo North  is prepared to honor what the courts have decreed regarding the tenants. That’s a big reversal but maybe getting Revel for dirt cheap has spurred a live-and-let-live attitude at Polo North. Oh, and you can say goodbye to the Revel moniker. Straub’s getting rid of that.

From where we sit, Straub’s intransigence ultimately made him a big winner in this scenario. Then again, no purchase of Revel is over until it’s over, so hold your breath.