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Organization and Background
12 Months Ended
Dec. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Background
Organization and Background
Station Casinos LLC, a Nevada limited liability company (the “Company” or “Station”), is a gaming, development and management company that owns and operates nine major hotel/casino properties and ten smaller casino properties (three of which are 50% owned) in the Las Vegas regional market. The Company also manages a casino in Sonoma County, California, which opened in November 2013, and a casino in Allegan County, Michigan, both on behalf of Native American tribes.
Station was formed in 2010 to acquire substantially all of the assets of Station Casinos, Inc. (“STN”) and Green Valley Ranch Gaming LLC pursuant to Chapter 11 plans of reorganization, which became effective on June 17, 2011. Also on June 17, 2011, the Company entered into various new or amended credit agreements, and entered into 25-year management agreements with subsidiaries of Fertitta Entertainment LLC (“Fertitta Entertainment”) for management of the Company. See Note 17 for additional information about the Fertitta Entertainment management agreements.
In accordance with the accounting guidance for reorganizations, on June 17, 2011, the Company adopted fresh-start reporting and reset the historical net book values of its assets and liabilities to their estimated fair values by assigning the Company’s reorganization value to its assets and liabilities at the adoption date, with the excess recognized as goodwill.
Acquisition of Fertitta Entertainment
On October 13, 2015, the Company entered into a membership interest purchase agreement to acquire all of the outstanding membership interests of Fertitta Entertainment for $460 million in cash, less amounts paid by the Company in satisfaction of indebtedness of Fertitta Entertainment on the closing date, and subject to reduction based on the amount, if any, of Fertitta Entertainment’s liabilities assumed by the Company (the “Fertitta Entertainment Acquisition”). The terms of the Fertitta Entertainment Acquisition were negotiated on behalf of the Company and approved by a special committee of the Company’s Board of Managers with the assistance and counsel of independent legal and financial advisors retained by such special committee.
The Fertitta Entertainment Acquisition is conditioned upon an initial public offering of Red Rock Resorts, Inc., a newly formed affiliate (the “IPO”), and the purchase price for the acquisition is expected to be funded primarily by a portion of the proceeds from the proposed IPO. The balance of the purchase price is expected to be funded by incurring additional debt. Both the Company and the sellers have agreed, following the closing, to indemnify each other for losses arising from certain breaches of the representations, warranties and covenants contained in the purchase agreement and for certain other liabilities, subject to certain limitations.
The consummation of the Fertitta Entertainment Acquisition, which has been unanimously approved by the Company’s Board of Managers, is subject to certain closing conditions, including, among other things, the closing of the proposed IPO. There can be no assurance that the Fertitta Entertainment Acquisition will be consummated. Following the consummation of the Fertitta Entertainment Acquisition, Fertitta Entertainment and its subsidiaries will be wholly-owned subsidiaries of the Company. At the closing of the Fertitta Entertainment Acquisition, Fertitta Entertainment is not expected to have material assets other than the management agreements for the Company’s business and its workforce. In connection with the Fertitta Entertainment Acquisition, the Company expects to terminate the management agreements between the Company and Fertitta Entertainment by mutual agreement for no additional consideration and assume or enter into new employment agreements or other employment relationships with the Company’s executive officers and other individuals who are employed by Fertitta Entertainment and provided services to the Company through the management agreements prior to the consummation of the Fertitta Entertainment Acquisition.
The Company and Fertitta Entertainment are controlled by brothers Frank J. Fertitta III, the Company's Chief Executive Officer and a member of its Board of Managers, and Lorenzo J. Fertitta, a member of the Company's Board of Managers, who collectively hold a majority of the voting and economic interests of both entities. The Fertitta Entertainment Acquisition constitutes an acquisition of an entity under common control which will be accounted for at historical cost in a manner similar to a pooling of interests. The excess of the purchase price over the historical cost of the net assets acquired will be treated as a deemed distribution for accounting purposes.