With new corporate name, Station Casinos IPO raises more than $531 million

Las Vegas Sun

This file photo shows Red Rock Resort in Summerlin.

Shares of Red Rock Resorts Inc., the new corporate name of Station Casinos, began publicly trading on the Nasdaq Stock Market today after the company raised more than $531 million in its initial public offering.

The Las Vegas-based company announced that it and existing shareholders had priced 27.25 million shares at $19.50 apiece, right in the middle of the expected range of $18 to $21. Red Rock’s shares, traded under the symbol RRR, were down 4.1 percent to $18.70 at the close of the market today.

In connection with the IPO, Red Rock has said it plans to buy Fertitta Entertainment, the Fertitta family company that has managed Station’s business, for $460 million, according to filings with the Securities and Exchange Commission.

CEO Frank Fertitta III and his brother Lorenzo, a director of the company, will each receive $113.5 million of those proceeds after debt is paid off, the filings said. Trusts for their six children will receive a total of $106.8 million.

Fertitta family entities are expected to hold about 87 percent of the voting power after the IPO.

“We believe the owner-operator dynamic of the Fertitta family’s continued leadership, together with its significant ownership, results in a high degree of alignment with our shareholders,” the company said in SEC filings.

This isn’t the first time Station has been a public company: It previously went public in 1993, but it was taken private in a management-led buyout in 2007. Wounded by the recession, Station filed for bankruptcy protection in 2009 and completed a restructuring in 2011.

Marc Falcone, Station’s chief financial officer, told state gaming regulators in January that the company had seen consistent revenue growth recently and that its operating margins had “improved dramatically.”

Station significantly reduced its leverage and cut debt by more than $400 million, which gave the company “one of the best balance sheets in the gaming industry today,” he said.

Station owns 19 large and small casinos in Southern Nevada, including its flagship Red Rock Resort in Summerlin, Green Valley Ranch in Henderson and the off-Strip Palace Station on Sahara Avenue. The company’s business generally caters to Las Vegas locals.

Outside Nevada, Station manages two casinos for Native American tribes: Graton in Northern California and Gun Lake in Michigan.

Despite its new corporate name, the company will still be known to customers as Station Casinos, officials have said.

The IPO has been met with strong criticism from the Unite Here union, whose Las Vegas affiliates — the Culinary Workers Union Local 226 and the Bartenders Union Local 165 — have long clashed with Station Casinos as they have attempted to organize there.

A Unite Here gaming analyst said in a statement earlier this month that there were “many red flags surrounding this pricey second-class IPO.” The union cited concerns about the Fertitta Entertainment transaction, the health of the Las Vegas locals gaming market and other issues.

Station’s IPO follows another one last week from MGM Growth Properties LLC, the new real estate subsidiary of MGM Resorts International. MGM Growth Properties priced its IPO at $21 per share, the high end of its expectations, and raised more than $1 billion.

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