SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 16, 1998
STATION CASINOS, INC.
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(Exact Name of Registrant as Specified in Charter)
NEVADA 000-21640 88-0136443
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(State or Other Juris- (Commission (IRS Employer
diction of Incorporation) File Number) Identification No.)
2411 WEST SAHARA AVE., LAS VEGAS, NEVADA 89102
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 367-2411
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On January 16, 1998, Station Casinos, Inc. (the "Company") entered
into an Agreement and Plan of Merger (the "Merger Agreement") with Crescent
Real Estate Equities Company, a Texas real estate investment trust
("Crescent"). Pursuant to the Merger Agreement, the Company will be merged
with and into Crescent (the "Merger"). The Merger Agreement also provides for
certain alternative structures to facilitate the combination of the
businesses of the Company and Crescent.
Subject to the terms, conditions and procedures set forth in the
Merger Agreement, upon consummation of the Merger, each share of the
Company's common stock, par value $.01 per share (the "Company Common
Stock")(including restricted shares of Company Common Stock issued under
Company Stock Plans (as defined in the Merger Agreement)) issued and
outstanding immediately prior to the effective time of the Merger (the
"Effective Time") (other than shares of Company Common Stock that are held in
treasury and shares of Company Common Stock owned by Crescent which shall be
canceled) together with the associated rights (the "Rights") issued pursuant
to the Rights Agreement dated October 6, 1997 between the Company and
Continental Stock Transfer & Trust Company (the "Rights Agreement"), shall,
as of the Effective Time, be converted into the right to receive 0.466
validly issued, fully paid and nonassessable shares of Crescent's common
shares of beneficial interest, par value $.01 per share (the "Common Shares").
Subject to the terms, conditions and procedures set forth in the
Merger Agreement, upon consummation of the Merger, each share of the
Company's $3.50 Convertible Preferred Stock (the "Convertible Preferred
Stock") issued and outstanding immediately prior to the Effective Time shall
as of the Effective Time be converted into the right to receive one validly
issued, fully paid and nonassessable $3.50 Convertible Preferred Share of
Crescent (the "Crescent Convertible Preferred Shares") convertible into the
number of shares of Company Common Stock and having the terms required in
Section 7(h) of the Certificate of Resolutions Establishing Designation,
Preferences and Rights of $3.50 Convertible Preferred Stock of the Company
dated March 25, 1996. In addition, at the option of the Company, the Company
will issue to Crescent and Crescent has agreed to purchase subject to the
terms, conditions and procedures set forth in the Merger
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Agreement up to an aggregate of 115,000 shares of a new series of preferred
stock of the Company (the "Redeemable Preferred Stock") at a price of $1,000
per share (plus accrued dividends) in cash in increments of 5,000 shares.
Crescent must fund the purchase price for the purchase of shares of
Redeemable Preferred Stock on the 10th business day following notice from the
Company or, in the case of a notice to sell 25,000 or more shares of
Redeemable Preferred Stock, the 20th business day following such notice. The
Company may not require Crescent to purchase shares of Redeemable Preferred
Stock more than two times in any 30-day period. The Company may redeem the
Redeemable Preferred Stock at any time for cash or for common stock of the
Company that has a then market price (determined on the basis of closing
prices for such stock for the 20 trading days immediately preceding the
redemption notice) equal to approximately 111% of the redemption price for
the Redeemable Preferred Shares to be redeemed. Any such issuance in
redemption will be made such that stock held by each owner of such common
stock so issued in excess of 9.9% of the Company's outstanding common stock
will generally be non-voting common stock. The Redeemable Preferred Stock
will have no voting rights except as required by law. Dividends of $100 per
share of Redeemable Preferred Stock per annum shall accrue without interest
and be payable when, as, and if declared out of legally available funds on a
fully cumulative basis. Unless written consent from Crescent is received, the
Company has agreed to use the net proceeds from the sale of the Redeemable
Preferred Stock to repay indebtedness under its revolving loan agreement
borrowings under which were used for acquisitions and master-planned
expansions.
As part of the transactions associated with the Merger, but
immediately prior to the Merger, certain operating assets and the employment
of the Company's employees will be transferred to a newly formed limited
liability company owned 50% by members of Crescent Operating, Inc. or another
affiliate established by Crescent and 50% by members of the Company's
managment team (the "Operating Company").
As set forth in the Merger Agreement, Crescent will be entitled to
receive a break-up fee equal to $54,000,000 if the Merger Agreement is
terminated (i) by either Crescent or the Board of Directors of the Company if
any required approval of the Merger by the holders of each class of capital
stock of the Company shall not have been obtained by reason of the failure to
obtain the required vote of stockholders, (ii) by Crescent if the Board of
Directors of the Company shall or shall resolve to, not recommend, or
withdraw its approval or recommendation of, the Merger, modify such approval
or recommendation in a manner adverse to Crescent, or approve or recommend a
superior proposal or (iii) by the Board of Directors of the Company in
accordance with the terms of the Merger Agreement if it receives a superior
proposal that Crescent does not match or exceed. Consummation of the Merger
is subject to the satisfaction of certain closing conditions, including the
approval of the Company's stockholders, expiration or termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1974
and the approval of any other governmental entity with jurisdiction in
respect of gaming laws required or necessary in connection with the Merger,
the Merger Agreement and the transactions contemplated by the Merger
Agreement. Upon consummation of the Merger, the Operating Company will operate
the six casino properties currently operated by the Company pursuant to one
or more leases with Crescent. Each lease will be a 10-year lease with one,
five-year renewal option. Each lease also will be a triple-net lease, and
will provide that the Operating Company is required to maintain the
properties in good conditiion at its expense. Crescent will establish and
maintain a reserve account to be used under certain circumstances for the
purchase of replacement furniture, fixtures and equipment with respect to the
properties. The lease provides for base and percentage rent but the amount of
the rent has not yet been determined. Under each lease, the Crescent will
have a right of first refusal to acquire, and thereafter to include under the
appropriate lease, any additional casino and/or hotel properties that the
Operating Company desires to acquire.
The Merger Agreement is attached hereto as Exhibit 1 and incorporated
herein by reference. The foregoing description is qualified in its entirety by
reference to the Merger Agreement.
In connection with the Merger transactions, Crescent and certain of
its affiliates will enter into a Right of First Refusal and Non-Competition
Agreement with the Operating Company. Under the Agreement, Crescent and
certain of its affiliates will give a right of first refusal to the Operating
Company as to any lease arrangement for a gaming property (defined as real
estate on which hotel and casino or other gaming-related operations are
conducted) in which the operators of the business conducted at the property
prior to the date the property is owned or acquired by Crescent or such
affiliates will cease to operate the business. Under the agreement, the
Operating Company and certain of its affiliates will give a right of first
refusal to a Crescent affiliate as to any direct or indirect opportunity to
invest in (i) gaming properties, real estate mortgages, real estate
derivatives or entities that invest primarily in or have a substantial
portion of their assets in such real estate assets and (ii) any other
gaming-related investments which may be structured in a manner so as to be
suitable for investment by a real estate investment trust. In addition,
without prior written consent, neither Crescent and certain of its affiliates
nor current members of Company management participating in the Operating
Company will be permitted to own or operate or otherwise engage in any
activities related to any gaming properties other than gaming properties
operated and leased by the Operating Company or any entity under its control;
provided that a Crescent affiliate may own a gaming property if a master
lease arrangement already exists at the property, if gaming activities
conducted at the property are incidental to the primary business operations
at the property or if the sellers or operators desire to enter into a master
lease arrangement with such affiliate.
The total value of the Merger transaction, including the Common
Shares and Crescent Convertible Preferred Shares issued in connection with
consummation of the Merger and Crescent's assumption or refinancing of
approximately $919 million in existing indebtedness of the Company and its
subsidiaries, is currently valued at approximately $1.7 billion.
Upon consummation of the Merger, the number of members of the Board
of Trust Managers of Crescent will be increased by two. The two new members
will be Frank J. Fertitta III, currently Chairman, Chief Executive Officer
and a director of the Company and Lorenzo J. Fertitta, currently a director
of the Company and brother of Frank J. Fertitta III.
On January 16, 1998, the Company issued a press release concerning the
Merger and the execution of the Merger Agreement. The Press Release is attached
hereto as Exhibit 2.
On January 16, 1998, immediately prior to the execution of the
Merger Agreement, the Company and Continental Stock Transfer & Trust Company,
as rights agent (the "Rights Agent"), entered into an amendment to Rights
Agreement (the "Amendment") amending definitional provisions of the Rights
Agreement. The Amendment excepts Crescent and its affiliates from the
definition of
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Acquiring Person (as defined in the Rights Agreement) to the extent that is a
Beneficial Owner (as defined in the Rights Agreement) as a result of the
approval, execution or delivery of, or the consummation of the transactions
contemplated by, the Merger Agreement, including, without limitation, the
purchase by Crescent of the Redeemable Preferred Stock.
The Amendment is attached hereto as Exhibit 3 and incorporated herein by
reference. The foregoing description is qualified in its entirety by
reference to the Amendment.
On December 22, 1997, prior to the commencement of negotiations
regarding the Merger, the Company amended and restated the employment
agreements of Frank J. Fertitta III, Glenn C. Christenson, Blake L. Sartini
and Scott M Nielson.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
EXHIBIT NO. DESCRIPTION
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1 Agreement and Plan of Merger, dated as of January 16, 1998,
among Crescent Real Estate Equities Company and Station
Casinos, Inc.
2 Press Release dated January 16, 1998.
3 Amendment to Rights Agreement, dated as of January 16, 1998,
between Station Casinos, Inc. and Continental Stock Transfer &
Trust Company, as Rights Agent.
4 Amended and Restated Employment Agreement of Frank J.
Fertitta III, dated as of December 22, 1997.
5 Amended and Restated Employment Agreement of Glenn C.
Christenson, dated as of December 22, 1997.
6 Amended and Restated Employment Agreement of Blake L. Sartini,
dated as of December 22, 1997.
7 Amended and Restated Employment Agreement of Scott M Nielson,
dated as of December 22, 1997.
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The Company agrees supplementally to furnish the Commission with a copy
of all schedules omitted from the foregoing exhibits upon its request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STATION CASINOS, INC.
Date: January 26, 1998 By: /s/ Glenn C. Christenson
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Glenn C. Christenson
Executive Vice President, Chief
Financial Officer, Chief
Administrative Officer and
Treasurer
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EXHIBIT INDEX
EXHIBIT
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1 Agreement and Plan of Merger, dated as of January 16, 1998,
among Crescent Real Estate Equities Company and Station
Casinos, Inc.
2 Press Release dated January 16, 1998.
3 Amendment to Rights Agreement, dated as of January 16, 1998,
between Station Casinos, Inc. and Continental Stock Transfer &
Trust Company, as Rights Agent.
4 Amended and Restated Employment Agreement of Frank J.
Fertitta III, dated as of December 22, 1997.
5 Amended and Restated Employment Agreement of Glenn C.
Christenson, dated as of December 22, 1997.
6 Amended and Restated Employment Agreement of Blake L. Sartini,
dated as of December 22, 1997.
7 Amended and Restated Employment Agreement of Scott M Nielson,
dated as of December 22, 1997.
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