EXHIBIT 2
[STATION CASINOS LOGO]
CONTACT: Glenn C. Christenson
Station Casinos, Inc.
Executive Vice President/Chief Financial Officer/Chief
Administrative Officer
(702) 367-2484
Jack Taylor
Station Casinos, Inc.
Director of Corporate Public Relations
(702) 221-6900
Rod Atamian
Vice President of Financial Services
Station Casinos, Inc.
(702) 221-6626
FOR IMMEDIATE RELEASE: JANUARY 16, 1997
CRESCENT REAL ESTATE EQUITIES AND
STATION CASINOS ANNOUNCE MERGER AGREEMENT
LAS VEGAS - Crescent Real Estate Equities Company ("Crescent:") (NYSE:CEI)
and Station Casinos, Inc. ("Station") (NYSE:STN) today announced a definitive
agreement providing for a tax free merger of the two companies. Crescent
will issue .466 shares of common stock (based on a fixed exchange ratio) for
each share of Station common stock representing a price to Station
shareholders of $18.00 per share, based on the prior twenty day average price
of Crescent's common stock on January 9, 1998. Crescent will also assume the
existing indebtedness of Station in the amount of approximately $919 million
and issue $103.5 million in convertible preferred shares to Station's
preferred shareholders, for a total transaction value of approximately $1.7
billion. Upon completion of the transaction, Crescent will have a total
market capitalization of approximately $8.5 billion.
The transaction is initially expected to be approximately 17% accretive
to Crescent's funds from operations. The merger will be accounted for as a
purchase and is anticipated to close in the third quarter of 1998, subject to
approval by two-thirds of Station's shareholders, the gaming regulators in
Nevada and Missouri, and subject to the satisfaction of other customary
closing conditions. In connection with the merger agreement, certain
individuals who own in the aggregate approximately 41% of Station's shares
have agreed to vote in favor of the transaction. In the event that the
merger agreement is terminated under certain circumstances, Station will be
required to pay Crescent a breakup fee of approximately $54 million.
As a result of the extended gaming license approval period, Crescent
will invest up to $115 million in convertible preferred stock prior to
completion of the merger in order for Station to pursue acquisitions or
complete development of masterplanned expansion projects at existing
hotel/casino properties.
Station is a multi-jurisdictional gaming enterprise that currently owns
and operates four hotel/casino properties in Las Vegas, Nevada as well as
gaming and entertainment complexes in St. Charles, Missouri and Kansas City,
Missouri. Station caters primarily to "locals" in Las Vegas and all of its
properties are located off the Las Vegas Strip.
It is anticipated that the hotel/casino properties will be leased by
Crescent to an operating company with profits being shared 50% by Crescent
Operating, Inc. (NASDAQ: COPI) and 50% by Station's management team. Frank
J. Fertitta III, president and chief executive officer, and the over 10,000
employees of Station will continue to operate the properties as the tenant.
Gerald W. Haddock, Crescent's president and chief executive officer
commented, "This transaction represents a major step forward in our strategy
of recapitalizing real estate intensive operating businesses which offer
long-term cash flow growth potential. Additionally, this excellent operating
team with whom we will be partnering is solely capable of operating this
business at our highest levels of expectation. As a result, we will be able
to continue our major focus of expanding our core office sector during the
early stages of this partnership. We view this company's concentrated
investment in the Las Vegas locals' market as being an opportunistic play
much like our initial office investments in 1994 and 1995 in submarkets
around Dallas, that is buying in front of significant population migration
patterns. Over the last four years, Frank and his team have created a
franchise with critical mass that makes it the dominant casino operator in
this market, which has become the market of choice for Las Vegas residents
and now represents the third largest gaming market in the country with over
$1.3 billion in annual gaming revenues."
Mr. Fertitta stated, "We are pleased to be Crescent's gaming partner
going forward. Crescent is the ideal partner to take advantage of the
opportunities for consolidation of the gaming industry. This transaction
gives our company the opportunity to accelerate our business strategy in Las
Vegas, the fastest growing community in the country. We expect to increase
our lead in the Las Vegas locals' market through acquisitions and
masterplanned expansions at our existing facilities. The population in Las
Vegas is expected to double over the course of the next nine years, and
through this merger we combine our industry knowledge with the best deal team
in the country. One of the real advantages of the merger is that my entire
management team stays in place. The merger will be transparent to our
customers and employees and will offer our employees even more opportunities
for growth as we expand."
Salomon Smith Barney acted as financial advisor and provided a fairness
opinion to Station and Merrill Lynch & Co. Incorporated provided a fairness
opinion to Crescent.
Certain matters discussed within this press release are forward-looking
statements within the meaning of the federal securities laws, and the
transactions contemplated herein are subject to certain closing conditions.
Although Crescent believes that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, it can give
no assurance that its expectations will be achieved. Factors that could
cause actual results to differ materially from Crescent's expectations
include
changes in real estate conditions (including rental rates and competing
properties) or in industries in which our principal tenants compete,
inability to complete pending acquisitions, failure to consummate anticipated
transactions, timely leasing of unoccupied square footage, timely releasing
of occupied square footage upon expiration, the ability to close pending
transactions, finding acquisition opportunities which meet its investment
strategy and other risks detailed from time to time in the Company's SEC
reports, including quarterly reports on Form 10-Q, reports on Form 8-K, and
annual reports on Form 10-K.
Crescent is a fully-integrated real estate company which, upon
completion of the pending acquisition, will own through its subsidiaries a
portfolio of real estate assets, consisting primarily of 83 office properties
and 7 retail properties totaling 30.7 million square feet, a 40% interest in
79 refrigerated warehouse facilities, 90 behavioral healthcare facilities, 6
casino/hotel properties, 6 full-service hotel properties totaling 1,962
rooms, 2 destination health and fitness resorts and economic interests in 5
residential development corporations. The office rental properties are
located primarily in 21 metropolitan submarkets in Texas and Colorado.
Station Casinos, Inc. is a Las Vegas-based, multi-jurisdictional gaming
company that owns and operates Palace Station Hotel & Casino, Boulder Station
Hotel & Casino, Texas Station Gambling Hall & Hotel, and Sunset Station in
Las Vegas, Nev., as well as slot machine route management services in
Southern Nevada. Station Casinos, Inc. also owns and operates Station Casino
St. Charles, a gaming and entertainment facility in St. Charles, Mo. and
Station Casino Kansas City, a gaming and entertainment facility in Kansas
City, Mo.
CRESCENT REAL ESTATE EQUITIES COMPANY CONTACT:
Dallas E. Lucas
Crescent Real Estate Equities Company
Senior Vice President/Chief Financial Officer
(817) 877-0426